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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 27, 1998
FELCOR LODGING TRUST INCORPORATED
(Exact name of registrant as specified in its charter)
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MARYLAND 1-14236 72-2541756
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
545 E. JOHN CARPENTER FREEWAY, SUITE 1300, IRVING, TEXAS 75062
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (972) 444-4900
FELCOR SUITE HOTELS, INC.
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On July 28, 1998, pursuant to an Agreement and Plan of Merger (the
"Merger Agreement") dated as of March 23, 1998 by and between FelCor Lodging
Trust Incorporated (formerly FelCor Suite Hotels, Inc.), a Maryland corporation
("FelCor"), and Bristol Hotel Company, a Delaware corporation ("Bristol"),
Bristol was merged with and into FelCor (the "Merger"). In connection with the
Merger, FelCor changed its name to "FelCor Lodging Trust Incorporated."
Annual meetings of the stockholders of FelCor and Bristol were held on
July 27, 1998 at which the stockholders were asked, pursuant to a Joint Proxy
Statement/Prospectus dated June 19, 1998 (the "Proxy Statement/Prospectus")
contained within FelCor's Form S-4 Registration Statement (No. 333-50509), to
consider and vote upon, among other things, the Merger Agreement. The
stockholders of each of FelCor and Bristol approved and adopted the Merger
Agreement at their respective meetings.
Following receipt of these approvals, Articles of Merger and a
Certificate of Merger relating to the Merger were filed with the appropriate
state authorities of the States of Maryland and Delaware. The Merger became
effective at 9:00 a.m., Eastern time, on July 28, 1998.
Prior to the effectiveness of the Merger, Bristol completed the
distribution to its stockholders ("Spin-Off") of all of the outstanding stock of
Bristol Hotels & Resorts ("BHR"), which became effective on July 27, 1998.
Stockholders of Bristol as of the close of business on July 27, 1998 received
one share of common stock, par value $.01 per share, of BHR for every two shares
of common stock of Bristol owned by them. BHR succeeded to the hotel operating
business of Bristol and in connection therewith, assumed most of Bristol's
former employees. The completion of the Spin-Off was a condition to the
consummation of the Merger. BHR and its subsidiaries operate the hotels acquired
by FelCor in the Merger pursuant to percentage leases.
Upon consummation of the Merger, each outstanding share of Bristol
common stock was converted into the right to receive 0.685 of a share of the
common stock of FelCor, par value $.01 per share ("Common Stock"). Fractional
shares of Common Stock, if any, were not issued in connection with the Merger.
Holders of fractional shares are entitled to receive an amount in cash equal to
the product of such fractional share multiplied by $29.0625, the closing price
per share of Common Stock as reported in the New York Stock Exchange, Inc.
Composite Tape on July 28, 1998. The exchange ratio was determined through
arm's-length negotiation between FelCor and Bristol.
The Common Stock continues to be listed and traded on the New York
Stock Exchange, Inc. under the symbol "FCH".
Following the effectiveness of the Merger, FelCor contributed
substantially all of the assets acquired by it pursuant to the Merger to FelCor
Lodging Limited Partnership (formerly FelCor Suites Limited Partnership) (the
"Partnership") in exchange for additional units of general partner interest in
the Partnership. As a result of such contribution, FelCor owns a 95.7% general
partner interest in the Partnership. In connection with this contribution, the
Partnership changed its name to "FelCor Lodging Limited Partnership."
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The other information required by this item has been previously
reported by FelCor and is included or incorporated by reference in the Joint
Proxy Statement/Prospectus.
ITEM 5. OTHER EVENTS
FelCor held its 1998 Annual Meeting of Stockholders of FelCor on July
27, 1998 (the "Annual Meeting"). At the Annual Meeting, the stockholders of
FelCor (i) approved and adopted the Merger Agreement, (ii) approved an amendment
to FelCor's Charter to change the name of FelCor from FelCor Suite Hotels, Inc.
to FelCor Lodging Trust Incorporated, (iii) approved an amendment to FelCor's
Charter to increase the authorized number of shares of capital stock of FelCor
to 220,000,000 shares, consisting of 200,000,000 shares of Common Stock and
20,000,000 of preferred stock, par value $.01 per share, (iv) elected Michael D.
Rose and Charles N. Matthewson as Class I directors of FelCor, to serve until
the Annual Meeting of Stockholders to be held in 2001, and (v) approved FelCor's
1998 Restricted Stock and Stock Option Plan ("1998 Plan"). The amendments to
FelCor's Charter became effective July 28, 1998.
The total number of shares entitled to vote at the Annual Meeting was
36,591,080 shares of Common Stock. The following table sets forth, with respect
to each matter voted upon at the Annual Meeting, the number of votes cast for,
the number of votes cast against, the number of votes abstaining (or, with
respect to the election of directors, the number of votes withheld), and the
number of broker non-votes, with respect to such matter:
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Votes
Votes Abstained/ Broker
Votes For Against Withheld Non-Votes
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Adoption of Merger Agreement 27,405,828 125,738 74,437 4,732,847
Approval of Charter Amendment to 27,454,446 87,290 64,268 4,732,846
Change Name
Approval of Charter Amendment to 24,150,101 3,388,206 67,696 4,732,847
Increase Authorized Shares
Election of Directors:
Michael D. Rose 32,276,002 --- 62,848 ---
Charles N. Matthewson 32,274,794 --- 64,056 ---
Approval of the 1998 Plan 25,140,222 7,089,800 108,828 ---
</TABLE>
In addition, upon the effectiveness of the Merger, the Board of
Directors of FelCor was increased to ten directors and Donald J. McNamara,
Richard C. North and Robert H. Lutz, Jr. were added as directors of FelCor.
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ITEM 7. FINANCIAL STATEMENT AND EXHIBITS
(a) Financial statements of businesses acquired.
The audited financial statements of Bristol for the three previous
calendar years, and the accountants' report related thereto, are set forth in
FelCor's Current Report on Form 8-K filed with the Securities and Exchange
Commission on April 23, 1998 and are incorporated herein by reference. The
unaudited financial statements of Bristol for the period ended March 31, 1998
set forth in Bristol's Quarterly Report on Form 10-Q for the quarter ended March
31, 1998, are filed as an exhibit to this report and are incorporated herein by
reference.
(b) Pro forma financial information.
The pro forma financial information required by this item is set forth
under the caption "Pro Forma Financial Information" on pages 72 through 89 of
the Joint Proxy Statement/Prospectus and is incorporated herein by reference.
(c) Exhibits.
The following exhibits are furnished in accordance with Item 601 of
Regulation S-K:
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
2.1 Agreement and Plan of Merger by and between FelCor
Suite Hotels, Inc. and Bristol Hotel Company dated as
of March 23, 1998 (filed as Exhibit 99 to FelCor's
Current Report on Form 8-K dated March 24, 1998 and
filed April 23, 1998 and incorporated herein by
reference)
3.1 Articles of Amendment and Restatement dated June 22,
1995, amending and restating the Charter of FelCor, as
amended or supplemented by Articles of Merger dated
June 23, 1995, Articles Supplementary dated April 30,
1996, Articles of Amendment dated August 8, 1996,
Articles of Amendment dated June 16, 1997, Articles of
Amendment dated October 30, 1997, Articles
Supplementary dated May 6, 1998, Articles of Merger
and attached Articles of Amendment dated July 27, 1998
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10.14 Fourth Amended and Restated Revolving Credit
Agreement dated as of July 1, 1997 among FelCor and
the Partnership, as Borrower, the Lenders party
thereto, The Chase Manhattan Bank, as Administrative
Agent, Chase Securities, Inc. as Arranger, and Bankers
Trust Company, NationsBank, N.A. and Wells Fargo Bank,
National Association as Co-Arrangers and Documentation
Agents
10.17 Amended and Restated Master Hotel Agreement dated as
of July 27, 1998 among FelCor, the Partnership, BHR
and the lessors and lessees named therein
10.18 Stockholders' and Registration Rights Agreement dated
as of July 27, 1998, by and among FelCor, Bass
America, Inc., Holiday Corporation, Bass plc,
United/Harvey Investors I, L.P., United/Harvey
Investors II, L.P. , United/Harvey Investors III,
L.P., United/Harvey Investors IV, L.P. and
United/Harvey Investors V, L.P.
99.1 Financial Statements of Bristol Hotel Company
excerpted from the Quarterly Report on Form 10-Q of
Bristol Hotel Company for the quarter ended March 30,
1998
99.2 Press Release dated July 27, 1998
99.3 Press Release dated July 28, 1998
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FELCOR LODGING TRUST INCORPORATED
Date: August __, 1998 By: /s/ Lawrence D. Robinson
---------------------------------
Lawrence D. Robinson
Senior Vice President, General
Counsel and Secretary
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INDEX TO EXHIBITS
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EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION OF EXHIBIT NUMBERED PAGE
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2.1 Agreement and Plan of Merger by and between FelCor Suite
Hotels, Inc. and Bristol Hotel Company dated as of March 23,
1998 (filed as Exhibit 99 to FelCor's Current Report on Form
8-K dated March 24, 1998 and filed April 23, 1998 and
incorporated herein by reference)
3.1 Articles of Amendment and Restatement dated June 22, 1995,
amending and restating the Charter of FelCor, as amended or
supplemented by Articles of Merger dated June 23, 1995,
Articles Supplementary dated April 30, 1996, Articles of
Amendment dated August 8, 1996, Articles of Amendment dated
June 16, 1997, Articles of Amendment dated October 30, 1997,
Articles Supplementary dated May 6, 1998, Articles of Merger
and attached Articles of Amendment dated July 27, 1998
10.14 Fourth Amended and Restated Revolving Credit Agreement
dated as of July 1, 1997 among FelCor and the Partnership,
as Borrower, the Lenders party thereto, The Chase
Manhattan Bank, as Administrative Agent, Chase Securities,
Inc. as Arranger, and Bankers Trust Company, NationsBank,
N.A. and Wells Fargo Bank, National Association as Co-
Arrangers and Documentation Agents
10.17 Amended and Restated Master Hotel Agreement dated as of
July 27, 1998 among FelCor, the Partnership, BHR and the
lessors and lessees named therein
10.18 Stockholders' and Registration Rights Agreement dated as of
July 27, 1998, by and among FelCor, Bass America, Inc., Holiday
Corporation, Bass plc, United/Harvey Investors I, L.P.,
United/Harvey Investors II, L.P. , United/Harvey Investors III,
L.P., United/Harvey Investors IV, L.P. and United/Harvey
Investors V, L.P.
99.1 Financial Statements of Bristol Hotel Company excerpted
from the Quarterly Report on Form 10-Q of Bristol Hotel
Company for the quarter ended March 30, 1998
99.2 Press Release dated July 27, 1998
99.3 Press Release dated July 28, 1998
</TABLE>
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EXHIBIT 3.1
STATE OF MARYLAND 370884
DEPARTMENT OF
ASSESSMENTS AND TAXATION
301 West Preston Street Baltimore, Maryland 21201
DATE: JUNE 22, 1995
THIS IS TO ADVISE YOU THAT THE ARTICLES OF AMENDMENT AND RESTATEMENT FOR
FELCOR SUITE HOTELS, INC. WERE RECEIVED AND APPROVED FOR RECORD ON JUNE 22,
1995 AT 11:22 AM.
FEE PAID: 50.00
[SEAL]
HARRY J. NOONAN
CHARTER SPECIALIST
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ARTICLES OF AMENDMENT AND RESTATEMENT
OF
FELCOR SUITE HOTELS, INC.
Felcor Suite Hotels, Inc., a Maryland corporation (the "Corporation"),
certifies as follows:
FIRST: The Corporation desires to amend and restate its Charter as
currently in effect, and, upon acceptance for record of these Articles of
Amendment and Restatement by the State Department of Assessments and Taxation
of the State of Maryland, the provisions set forth in these Articles of
Amendment and Restatement will be all of the provisions of the Charter of the
Corporation as currently in effect.
SECOND: The Charter of the Corporation is hereby amended and restated in
its entirety to read as set forth in Exhibit A attached hereto.
THIRD: The amendment and restatement of the charter of the Corporation
set forth in these Articles of Amendment and Restatement was advised by the
Board of Directors of the Corporation and was approved by the sole stockholder
of the Corporation.
FOURTH: The current address of the principal office of the Corporation
is 11 East Chase Street, Baltimore, Maryland 21202.
FIFTH: The name and address of the current resident agent of the
Corporation is CSC-Lawyers Incorporating Service Company, 11 East Chase Street,
Baltimore, Maryland 21202.
SIXTH: The current number of directors of the Corporation is one (1),
which number may be increased or decreased from time to
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time pursuant to the Charter and the Bylaws of the Corporation. The name of the
current sole director of the Corporation is Thomas J. Corcoran, Jr.
SEVENTH: The amendment set forth in these Articles of Amendment and
Restatement does not increase the authorized capital stock of the Corporation.
IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment
and Restatement to be executed in its name and on its behalf as of the 22nd day
of June 1995, by its President, who acknowledges that these Articles of
Amendment and Restatement are the act of the Corporation and certifies that, to
the best of his knowledge, information and belief and under penalties for
perjury, all matters and facts contained in these Articles of Amendment and
Restatement are true in all material respects.
ATTEST: FELCOR SUITE HOTELS, INC.
/s/ NICHOLAS R. PETERSON By: /s/ THOMAS J. CORCORAN, JR. [SEAL]
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Nicholas R. Peterson Thomas J. Corcoran, Jr.
Assistant Secretary President
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EXHIBIT A
ARTICLE I.
I, David A. Gibbons, whose post office address is 10 Light Street,
Baltimore, Maryland 21202, being at least 18 years of age, hereby form a
corporation under the Maryland General Corporation Law.
ARTICLE II.
NAME
The name of the Corporation is:
FelCor Suite Hotels, Inc.
ARTICLE III.
NATURE OF BUSINESS OR PURPOSES
The nature of the business or purposes to be conducted or
promoted by the Corporation is to engage in any lawful act or activity for
which corporations may be organized under the Maryland General Corporation Law.
In addition to the powers and privileges conferred upon the
Corporation by law and those incidental thereto, the Corporation shall possess
and may exercise all the powers and privileges which are necessary or
convenient to the conduct, promotion or attainment of the business or purposes
of the Corporation.
Without limiting the generality of the foregoing purpose, at such time
or times as the Board of Directors determines that it is in the interest of the
Corporation and its stockholders that the Corporation engage in the business
of, and conduct its business and affairs so as to qualify as, a real estate
investment trust (as that phrase is defined in the Internal Revenue Code of
1986, as amended (the "Code")), the purpose of the Corporation shall include
engaging in the business of a real estate investment trust ("REIT"). This
reference to such purpose shall not make unlawful or unauthorized any otherwise
lawful act or activity that the Corporation may take that is inconsistent with
such purpose.
ARTICLE IV.
PRINCIPAL OFFICE AND RESIDENT AGENT
The address of the Corporation's principal office in the State
of Maryland is 11 East Chase Street, Baltimore, Maryland 21202. The name and
address of its resident agent is CSC-Lawyers Incorporating Service Company, 11
East Chase Street, Baltimore, Maryland 21202.
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ARTICLE V.
CAPITAL STOCK
A. Authorized Shares. The total number of shares of capital
stock that the Corporation shall have authority to issue is Sixty Million
(60,000,000) shares, consisting of Fifty Million (50,000,000) shares of Common
Stock, of the par value of One Cent ($0.01) each, and Ten Million (10,000,000)
shares of Preferred Stock, of the par value of One Cent ($0.01) each, amounting
in aggregate par value of $600,000.
B. The following is a description of each class of the capital
stock that the Corporation shall have authority to issue, including the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption thereof to the extent applicable thereto:
Common Stock.
(1) Dividend Rights. Subject to the rights of any series
of Preferred Stock created pursuant to the further provisions of this Section B
of this Article and subject to the terms of Article V hereto, the holders of
shares of Common Stock shall be entitled to receive such dividends as may be
declared thereon by the Board of Directors out of funds legally available
therefor.
(2) Voting Rights. Subject to the rights of the holders
of any series of Preferred Stock created pursuant to the further provisions of
this Section B of this Article, the holders of shares of the Common Stock shall
possess all of the voting power of the capital stock of the Corporation and
shall have the exclusive right to vote upon, authorize and approve any and all
matters which may properly come before the stockholders of the Corporation.
Each holder of shares of Common Stock shall be entitled to one vote for each
share of Common Stock held by such stockholder.
(3) Rights Upon Liquidation. Subject to the rights of
any series of Preferred Stock created pursuant to the further provisions of
this Section B of this Article and subject to the terms of Article V hereto, in
the event of any voluntary or involuntary liquidation, dissolution or winding
up of, or any distribution of the assets of, the Corporation, each holder of
shares of Common Stock shall be entitled to receive, ratably with each other
holder of shares of Common Stock, that portion of the assets of the Corporation
available for distribution to the holders of its Common Stock.
Preferred Stock.
Subject to the provisions of sections D. and E. of this
Article V, the Board of Directors of the Corporation is hereby authorized and
empowered to classify or reclassify, in one or more series, any of the unissued
shares of the Preferred Stock of the Corporation by establishing the number of
shares of such series and by setting, changing or eliminating any of the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, or terms and condition of
redemption of such shares, all of which shall be set forth in articles
supplementary to this Charter executed, acknowledged, filed and
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recorded in the manner required by the Maryland General Corporation Law
("Articles Supplementary"), and as may be permitted by the Maryland General
Corporation Law.
C. Issuance of Stock. The Board of Directors is hereby
authorized and empowered to authorize the issuance by the Corporation from time
to time of shares of any class of capital stock of the Corporation, whether now
or hereafter authorized, or securities convertible into shares of capital stock
of any class or classes, whether now or hereafter authorized, for such
consideration and on such terms and conditions as may be deemed advisable by
the Board of Directors and without any action by the stockholders.
D. Restrictions on Transfer; Designation of Shares-in-Trust.
(1) Definitions. For purposes of this Section D, the
following terms shall have the following meanings:
"Beneficial Ownership" shall mean ownership of Equity
Stock by a Person who would be treated as an owner of such shares of Equity
Stock either directly or indirectly through the application of Section 544 of
the Code, as modified by Section 856(h)(1)(B) of the Code. The terms
"Beneficial Owner," "Beneficially Owns" and "Beneficially Owned" shall have
correlative meanings.
"Beneficiary" shall mean, with respect to any Trust,
one or more organizations described in each of Section 170(b)(1)(A) and Section
170(c) of the Code which are named by the Corporation as the beneficiary or
beneficiaries of such Trust, in accordance with the provisions of subsection
E.(1) of this Article V.
"Board of Directors" shall mean the Board of
Directors of the Corporation.
"Bylaws" shall mean the Bylaws of the Corporation, as
amended.
"Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time.
"Constructive Ownership" shall mean ownership of
Equity Stock by a Person who would be treated as an owner of such shares of
Equity Stock either directly or indirectly through the application of Section
318 of the Code, as modified by Section 856(d)(5) of the Code. The terms
"Constructive Owner," "Constructively Owns" and "Constructively Owned" shall
have correlative meanings.
"Equity Stock" shall mean authorized capital stock of
the Corporation that is either Preferred Stock or Common Stock and shall
include all shares of Preferred Stock or Common Stock that are held as
Shares-in-Trust in accordance with the provisions of section E. of this Article
V.
"Market Price" shall mean, on any date and with
respect to any Equity Stock, the average of the Closing Price for the five
consecutive Trading Days ending on such
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date. The "Closing Price" shall mean, on any date and with respect to any
Equity Stock, the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular
way, of such Equity Stock, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if such Equity Stock is
not listed or admitted to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which such
Equity Stock is listed or admitted to trading or, if such Equity Stock is not
listed or admitted to trading on any national securities exchange, the last
quoted price, or if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System or, if such system is no
longer in use, the principal other automated quotations system that may then be
in use or, if such Equity Stock is not quoted by any such organization, the
average of the closing bid and asked prices of such Equity Stock as furnished
by a professional market maker, selected by the Board of Directors of the
Company, then making a market in such Equity Stock. "Trading Day" shall mean a
day on which the principal national securities exchange on which such Equity
Stock is listed or admitted to trading is open for the transaction of business
or, if such Equity Stock is not listed or admitted to trading on any national
securities exchange, shall mean any day other than a Saturday, a Sunday or a
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"Merger" shall mean the merger of FelCor Suite
Hotels, Inc., a Delaware corporation, with and into the Corporation.
"Ownership Limit" shall mean, with respect to each
class of Equity Stock of the Corporation outstanding as of any particular time,
9.9% of the total number of such shares of such class of Equity Stock
outstanding as of such time.
"Non-Transfer Event" shall mean an event other than a
purported Transfer that would cause any Person to Beneficially Own or
Constructively Own shares of Equity Stock in excess of the Ownership Limit,
including, but not limited to, the granting of any option or entering into any
agreement for the sale, transfer or other disposition of Equity Stock or the
sale, transfer, assignment or other disposition of any securities or rights
convertible into or exchangeable for Equity Stock.
"Permitted Transferee" shall mean any Person
designated as a Permitted Transferee in accordance with the provisions of
subsection E.(5) of this Article V.
"Person" shall mean an individual, corporation,
partnership, limited liability company, estate, trust, association, joint stock
company, government or agency or subdivision thereof, charitable organization,
or other entity and also includes a group as that term is used for purposes of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
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"Prohibited Owner" shall mean, with respect to any
purported Transfer or Non-Transfer Event, any Person who, but for the
provisions of subsection D.(3) of this Article V, would own record title to
shares of Equity Stock.
"REIT" shall mean a Real Estate Investment Trust
under Section 856 of the Code.
"Restriction Termination Date" shall mean the first
day after the date of the Merger on which the Board of Directors and the
stockholders of the Corporation determine, in accordance with the provisions of
Article VII hereof, that it is no longer in the best interests of the
Corporation to attempt to, or continue to, qualify as a REIT.
"Transfer" shall mean any sale, transfer, gift,
assignment, devise or other disposition of Equity Stock, whether voluntary or
involuntary, whether of record, constructively or beneficially and whether by
operation of law or otherwise.
"Trust" shall mean any separate trust created
pursuant to subsection D.(3) of this Article V and administered in accordance
with the terms of section E. of this Article V, for the exclusive benefit of
any Beneficiary.
"Trustee" shall mean any person or entity
unaffiliated with both the Corporation and any Prohibited Owner, such Trustee
to be designated by the Corporation to act as trustee of any Trust, or any
successor trustee thereof.
(2) Restriction on Transfers.
(a) Except as provided in subsection D.(9) of
this Article V, from the date of the Merger and prior to the
Restriction Termination Date, no Person shall Beneficially Own or
Constructively Own shares of the outstanding Equity Stock in excess of
the Ownership Limit.
(b) Except as provided in subsection D.(9) of
this Article V, from the date of the Merger and prior to the
Restriction Termination date, any Transfer that, if effective, would
result in any Person Beneficially Owning or Constructively Owning
Equity Stock in excess of the Ownership Limit shall be void ab initio
as to the Transfer of that number of shares of Equity Stock which
would be otherwise Beneficially Owned or Constructively Owned by such
Person in excess of the Ownership Limit; and the intended transferee
shall acquire no rights in such excess shares of Equity Stock.
(c) Notwithstanding any other provision herein,
from the date of the Merger and prior to the Restriction Termination
Date, any Transfer that, if effective, would result in the Equity
Stock being directly or indirectly owned by fewer than 100 Persons
(determined without reference to any rules of attribution) shall be
void ab initio in its entirety; and the intended transferee shall
acquire no rights in such shares of Equity Stock.
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(d) Notwithstanding any other provision herein,
from the date of the Merger and prior to the Restriction Termination
Date, any Transfer of shares of Equity Stock that, if effective, would
result in the Corporation being "closely held" within the meaning of
Section 856(h) of the Code shall be void ab initio as to the Transfer
of that number of shares of Equity Stock which would cause the
Corporation to be "closely held" within the meaning of Section 856(h)
of the Code; and the intended transferee shall acquire no rights in
such excess shares of Equity Stock.
(e) Notwithstanding any other provision herein,
from the date of the Merger and prior to the Restriction Termination
Date, any Transfer of shares of Equity Stock that, if effective, would
result in the Corporation Constructively Owning 10% or more of the
ownership interests in any tenant or subtenant of the Corporation's
real property (including the real property held by FelCor Suites
Limited Partnership and any other partnership in which the Corporation
owns an interest subsequent to the Merger), within the meaning of
Section 856(d)(2)(B) of the Code, shall be void ab initio as to the
Transfer of that number of shares of Equity Stock in excess of the
number that could have been Transferred without such result; and the
intended transferee shall acquire no rights in such excess shares of
Equity Stock.
(f) Notwithstanding any other provision herein,
from the date of the Merger and prior to the Restriction Termination
Date, any Transfer of shares of Equity Stock that, if effective,
would cause the Corporation to fail to qualify as a REIT shall be void
ab initio as to the Transfer of that number of shares of Equity Stock
in excess of the number that could have been Transferred without such
result; and the intended transferee shall acquire no rights in such
excess shares of Equity Stock.
(3) Transfer in Trust.
(a) If, notwithstanding the other provisions
contained in this Article V, at any time after the date of the Merger
and prior to the Restriction Termination Date, there is a purported
Transfer or Non-Transfer Event such that any Person would either
Beneficially Own or Constructively Own Equity Stock in excess of the
Ownership Limit, then, (i) except as otherwise provided in subsection
D.(9) of this Article V, the purported transferee shall acquire no
right or interest (or, in the case of a Non-Transfer Event, the person
holding record title to the Equity Stock Beneficially Owned or
Constructively Owned by such Beneficial Owner or Constructive Owner,
shall cease to own any right or interest) in such number of shares of
Equity Stock which would cause such Beneficial Owner or Constructive
Owner to Beneficially Own or Constructively Own shares of Equity Stock
in excess of the Ownership Limit; and (ii) such number of shares of
Equity Stock in excess of the Ownership Limit (rounded up to the
nearest whole share) shall be designated Shares-in-Trust and, in
accordance with the provisions of section E. of this Article V,
transferred automatically and by operation of law to and held in a
Trust. Such transfer to a Trust and the designation of the shares as
Shares-in-Trust shall be effective as of the close of business on the
business day next preceding the date of the purported Transfer or
Non-Transfer Event, as the case may be.
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(b) If, notwithstanding the other provisions
contained in this Article V, at any time after the date of the Merger
and prior to the Restriction Termination Date, there is a purported
Transfer or Non-Transfer Event that, if effective, would cause the
Corporation either to become "closely held" within the meaning of
Section 856(h) of the Code, to Constructively Own 10% or more of the
ownership interests in any tenant or subtenant of the Corporation's
real property (including the real property held by FelCor Suites
Limited Partnership and any other partnership in which the Corporation
owns an interest subsequent to the Merger) within the meaning of
Section 856(d)(2)(B) of the Code, or otherwise to fail to qualify as a
REIT (other than as a result of a violation of the requirement,
contained in Section 856 (a)(5) of the Code, that a REIT have at
least 100 shareholders), then (i) the purported transferee shall
acquire no right or interest (or, in the case of a Non-Transfer Event,
the person holding record title to the Equity Stock with respect to
which such Non-Transfer Event occurred, shall cease to own any right
or interest) in such number of shares of Equity Stock, the ownership
of which by such purported transferee or record holder would cause the
Corporation either to be "closely held" within the meaning of Section
856(h) of the Code, to violate the 10% limitation of Section
856(d)(2)(B) of the Code or otherwise to fail to qualify as a REIT
(other than as a result of a violation of the 100 shareholder
requirement of Section 865(a)(5) of the Code; and (ii) such number of
shares of Equity Stock (rounded up to the nearest whole share) shall
be designated Shares-in-Trust and, in accordance with the provisions
of section E. of this Article V, transferred automatically and by
operation of law to a Trust to be held therein in accordance with that
section E. Such transfer to a Trust and the designation of shares as
Shares-in-Trust shall be effective as of the close of business on the
business day next preceding the date of the Transfer or Non-Transfer
Event, as the case may be.
(4) Remedies For Breach. If the Corporation or its
designees at any time shall determine in good faith that a Transfer has taken
place in violation of subsection D.(2) of this Article V or that a Person
intends to acquire or has attempted to acquire Beneficial Ownership or
Constructive Ownership of any shares of Equity Stock in violation of subsection
D.(2) of this Article V, the Board of Directors shall be authorized and
empowered to take such action as it deems advisable to refuse to give effect to
or to prevent such Transfer or acquisition, including, but not limited to,
refusing to give effect to such Transfer on the books of the Corporation or
instituting proceedings to enjoin such Transfer or acquisition.
(5) Notice of Restricted Transfer. Any Person who
attempts to acquire or acquires shares of Equity Stock in violation of
subsection D.(2) of this Article V, or any Person who holds record title to any
shares of Equity Stock that were transferred to a Trust pursuant to the
provisions of subsection D.(3) of this Article V, shall immediately give
written notice to the Corporation of such event and shall provide to the
Corporation such other information as the Corporation may request in order to
determine the effect, if any, of such purported Transfer or the Non-Transfer
Event, as the case may be, on the Corporation's status as a REIT.
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(6) Owners Required To Provide Information. From the
date of the Merger and prior to the Restriction Termination Date:
(a) Each person who is a Beneficial Owner or
Constructive Owner of more than 5% (or such lower percentage as may be
required pursuant to the Code or regulations issued under the Code) of
the outstanding Equity Stock of the Corporation shall, no later than
January 30 of each year, give written notice to the Corporation
stating the name and address of such Beneficial Owner or Constructive
Owner, the number of shares of Equity Stock Beneficially Owned or
Constructively Owned, and a description of how such shares are held.
Each such Beneficial Owner or Constructive Owner shall provide to the
Corporation such additional information as the Corporation may request
in order to determine the effect, if any, of such Beneficial Ownership
on the Corporation's status as a REIT and to ensure compliance with
the Ownership Limit.
(b) Each Person who is a Beneficial Owner or
Constructive Owner of Equity Stock and each Person (including a
stockholder of record) who is holding Equity Stock for a Beneficial
Owner or Constructive Owner shall provide to the Corporation, promptly
following any request therefor, such information as the Corporation
may deem necessary in order to determine the Corporation's status as a
REIT and to ensure compliance with the Ownership Limit.
(7) Remedies Not Limited. Nothing contained in this
Article V shall limit the authority of the Board of Directors to take any and
all lawful actions, whether or not specifically set forth herein, as it deems
necessary or advisable to protect the Corporation and the interests of its
stockholders by preserving the Corporation's status as a REIT and by ensuring
compliance with the Ownership Limit.
(8) Ambiguity. In the case of an ambiguity in the
application of any of the provisions of sections D. or E., including but not
limited to any definition contained in subsection D.(1), of this Article V, the
Board of Directors shall have the power to finally resolve such ambiguity and
interpret the provisions hereof with respect to any situation, based on the
facts known to it.
(9) Exception. The ownership limitations set forth in
subsections D.(2) and/or D.(3) of this Article V shall not apply to the
acquisition of shares of Equity Stock of the Corporation by an underwriter in a
public offering of those shares or in any transaction involving the issuance of
shares of Equity Stock by the Corporation in which the Board of Directors
determines that the underwriter or other person or party initially acquiring
those shares will timely distribute those shares to or among others so that,
following such distribution, the ownership of those shares will not be in
violation of subsections D.(2) and/or D.(3) of this Article V. The Board of
Directors, in the exercise of its sole and absolute discretion, may exempt from
the operation of subsections D.(2) and/or D.(3) of this Article V certain
specified shares of Equity Stock of the Corporation proposed to be transferred
to, and/or owned by, a person who has provided the Board of Directors with
such evidence, undertakings and assurances as the Board of Directors may
require that such transfer to, and/or ownership by, such person of the
specified shares will not prevent the continued qualification of the
Corporation as a REIT under the Code and the regulations issued under the Code.
The Board
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of Directors may, but shall not be required, to condition the grant of any such
exemption upon the obtaining of an opinion of counsel, a ruling from the
Internal Revenue Service or such other assurances as the Board of Directors
shall deem to be satisfactory.
(10) Legend. Each certificate for Equity Stock, in
addition to any other legend that may be placed thereon, shall bear the
following legend:
"The shares of Equity Stock represented by this certificate
are subject to restrictions on transfer for the purpose of maintaining
the Corporation's status as a real estate investment trust under the
Internal Revenue Code of 1986, as amended (the "Code"). No Person may
at any time (1) Beneficially Own or Constructively Own shares of any
class of Equity Stock in excess of 9.9% (or such other percentage as
may be determined by the Board of Directors of the Corporation) of the
total number of shares of such class of Equity Stock outstanding as of
such time; (2) Beneficially Own Equity Stock which would result in the
Corporation being "closely held" under Section 856(h) of the Code; or
(3) Constructively Own Equity Stock which would result in the
Corporation Constructively Owning 10% or more of the ownership
interests in any tenant or subtenant of the Corporation's real
property (including the real property held by FelCor Suites Limited
Partnership and any other partnership in which the Corporation owns an
interest), within the meaning of Section 856(d)(2)(B) of the Code.
Any Person who attempts to Beneficially Own or Constructively Own
shares of Equity Stock in excess of the above limitations must
immediately notify the Corporation in writing. If the restrictions
above are violated, the shares of Equity Stock represented hereby will
be transferred automatically and by operation of law to a Trust and
shall be designated Shares-in-Trust. All capitalized terms in this
legend have the meanings assigned to them in the Corporation's
Charter, as the same may be further amended from time to time. The
shares of Equity Stock represented by this certificate are subject to
all of the provisions of the Charter and Bylaws of the Corporation,
each as amended from time to time, to all of which the holder, by
acceptance hereof, assents.
The Corporation will furnish to any stockholder, upon request
and without charge, a copy of its Charter and Bylaws, and all
amendments thereto, setting forth the restrictions on transfer and a
statement of (i) the designations and any preferences, conversion and
other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption of
the stock of each class which the Corporation is authorized to issue,
(ii) the differences in the relative rights and preferences between
the shares of each series of each class of the stock which the
Corporation is authorized to issue to the extent they have been set by
the Board of Directors and (iii) the authority of the Board of
Directors to set the relative rights and preferences of subsequent
series of stock of the Corporation."
(11) Severability. If any provision of this Article V or
any application of any such provision is determined to be invalid by any
Federal or state court having jurisdiction over the issues, the validity of the
remaining provisions shall not be affected and other applications
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of such provision shall be affected only to the extent necessary to comply with
the determination of such court.
E. Shares-in-Trust.
(1) Trust. Any shares of Equity Stock transferred to a
Trust and designated Shares-in-Trust pursuant to subsection D.(3) of this
Article V shall be held by the Trustee for the exclusive benefit of the
Beneficiary. The Corporation shall name a beneficiary or beneficiaries of each
Trust within five (5) business days after receipt of written notice of the
existence thereof. Any transfer to a Trust and designation of shares of Equity
Stock as Shares-in-Trust, pursuant to subsection D.(3) of this Article V, shall
be effective as of the close of business on the business day next preceding the
date of the purported Transfer or Non-Transfer Event that results in the
transfer to such Trust. Shares-in-Trust shall remain issued and outstanding
shares of Equity Stock of the Corporation and shall be entitled to the same
rights and privileges on identical terms and conditions as are all other issued
and outstanding shares of Equity Stock of the same class and series. When
transferred to a Permitted Transferee, in accordance with the provisions of
subsection E.(5) of this Article V, such Shares-in-Trust shall be released from
the Trust and cease to be designated as Shares-in-Trust.
(2) Dividend Rights. The Trustee, as the record holder
of Shares-in-Trust, shall be entitled to receive all dividends and
distributions as may be declared by the Board of Directors of the Corporation
on such shares of Equity Stock and shall hold such dividends or distributions
in trust for the benefit of the Beneficiary. The Prohibited Owner with respect
to Shares-in-Trust shall repay to the Trustee the amount of any dividends or
distributions received by it that (i) are attributable to any shares of Equity
Stock designated Shares-in-Trust and (ii) the record date of which was on or
after the date that such shares became Shares-in-Trust. The Corporation shall
take all lawful measures that the Board of Directors determines to be
reasonably necessary to recover the amount of any such dividend or distribution
paid to a Prohibited Owner, including, if necessary, withholding any portion of
future dividends or distributions payable on shares of Equity Stock
Beneficially Owned or Constructively Owned by the Person who, but for the
provisions of subsection D.(3) of this Article V, would Constructively Own or
Beneficially Own the Shares-in-Trust; and, as soon as reasonably practicable
following the Corporation's receipt or withholding thereof, shall pay over to
the Trustee for the benefit of the Beneficiary the dividends so received or
withheld, as the case may be.
(3) Rights Upon Liquidation. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of, or any
distribution of the assets of, the Corporation, each Trustee of Shares-in-Trust
shall be entitled to receive, ratably with each other holder of Equity Stock of
the same class or series, that portion of the assets of the Corporation which
is available for distribution to the holders of such class and series of Equity
Stock. The Trustee shall distribute to the Prohibited Owner the amounts
received upon such liquidation, dissolution, or winding up, or distribution;
provided, however, that the Prohibited Owner shall not be entitled to receive
amounts pursuant to this subsection E.(3) in excess of, in the case of a
purported Transfer in which the Prohibited Owner gave value for shares of
Equity Stock and which Transfer resulted in the transfer of the shares to the
Trust, the price per share, if any, such Prohibited Owner paid for the Equity
Stock and, in the case of a Non-Transfer Event or
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Transfer in which the Prohibited Owner did not give value for such shares
(e.g., if the shares were received through a gift or devise) and which
Non-Transfer Event or Transfer, as the case may be, resulted in the transfer of
shares to the Trust, the price per share equal to the Market Price on the date
of such Non-Transfer Event or purported Transfer. Any remaining amount in such
Trust shall be distributed to the Beneficiary.
(4) Voting Rights. The Trustee shall be entitled to vote
all Shares-in-Trust. Any vote by a Prohibited Owner as a holder of shares of
Equity Stock prior to the discovery by the Corporation that the shares of
Equity Stock are Shares-in-Trust shall, subject to applicable law, be rescinded
and shall be void ab initio with respect to such Shares-in-Trust and the
Prohibited Owner shall be deemed to have given, as of the close of business on
the business day prior to the date of the purported Transfer or Non-Transfer
Event that results in the transfer to the Trust of the shares of Equity Stock
under subsection E.(3) of this Article V, an irrevocable proxy to the Trustee
to vote the Shares-in-Trust in the manner in which the Trustee, in its sole and
absolute discretion, desires.
(5) Designation of Permitted Transferee. The Trustee
shall have the exclusive and absolute right to designate a Permitted Transferee
of any and all Shares-in-Trust. As soon as reasonably practicable, but in an
orderly fashion so as not to materially adversely affect the Market Price of
the Shares-in-Trust, the Trustee shall designate one or more Persons as
Permitted Transferees, provided, however, that (i) each such Permitted
Transferee so designated shall purchase for valuable consideration (whether in
a public or private sale) the Shares-in-Trust and (ii) each such Permitted
Transferee so designated may acquire such Shares-in-Trust without such
acquisition resulting in a transfer to a Trust and the redesignation of such
shares of the Equity Stock so acquired as Shares-in-Trust pursuant to the
provisions of subsection D.(3) of this Article V. Upon the designation by the
Trustee of a Permitted Transferee in accordance with the provisions of this
subsection E.(5), the Trustee of a Trust shall (i) cause to be transferred to
the Permitted Transferee that number of Shares-in-Trust acquired by the
permitted Transferee; (ii) cause to be recorded on the books of the Corporation
that the Permitted Transferee is the holder of record of such number of shares
of Equity Stock; and (iii) distribute to the Beneficiary any and all amounts
held with respect to the Shares-in-Trust after making payment to the Prohibited
Owner of the amount determined pursuant to subsection E.(6) of this Article V.
(6) Compensation to Record Holder of Shares of Equity
Stock that Become Shares-In-Trust. Any Prohibited Owner shall be entitled
(after giving written notice to the Corporation of the existence of
Shares-in-Trust and following the designation of the Permitted Transferee in
accordance with subsection D.(5) of this Article V) to receive from the
Trustee, in respect of such Shares-in-Trust, the lesser of (i) in the case of
(a) a purported Transfer in which the Prohibited Owner gave value for shares of
Equity Stock and which Transfer resulted in the transfer of the shares to a
Trust, the price per share, if any, such Prohibited Owner paid for the Equity
Stock, or (b) a Non-Transfer Event or purported Transfer in which the
Prohibited Owner did not give value for such shares (e.g., if the shares were
received through a gift or devise) and which Non-Transfer Event or purported
Transfer, as the case may be, resulted in the transfer of shares to the Trust,
the price per share equal to the Market Price on the date of such Non-Transfer
Event or purported Transfer or (ii) the price per share received by the Trustee
of the Trust from the sale or other disposition of such Shares-in-Trust in
accordance with subsection E.(5) of this Article V. Any amounts received by
the Trustee in respect of such
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Shares-in-Trust and in excess of such amounts to be paid to the Prohibited
Owner pursuant to this subsection E.(6) shall be distributed to the Beneficiary
in accordance with the provisions of subsection E.(5) of this Article V. Each
Beneficiary and Prohibited Owner waive any and all claims that it may have
against the Trustee and the Corporation arising out of the transfer of any
Equity Stock to a Trust, the designation of any Equity Stock as Shares-in-Trust
and the disposition of any Shares-in-Trust, except for claims arising out of
the gross negligence or willful misconduct of, or any failure to make payments
in accordance with section E. of this Article V by, such Trustee or the
Corporation.
(7) Purchase Right in Shares-in-Trust. Shares-in-Trust
shall be deemed to have been offered for sale to the Corporation, or its
designee, at a price per share equal to the lesser of (i) the price per share
in the transaction that resulted in such shares being designated as
Shares-in-Trust (or, in the case of devise, gift or Non- Transfer Event, the
Market Price at the time of such devise, gift or Non-Transfer Event) and (ii)
the Market Price on the date the Corporation, or its designee, accepts such
offer. The Corporation shall have the right to accept such offer for a period
of ninety days after the later of (A) the date of the Non-Transfer Event or
purported Transfer which resulted in such Shares-in-Trust and (B) the date the
Corporation determines in good faith that a purported Transfer or Non-Transfer
Event resulting in the designation of any Equity Stock as Shares-in-Trust has
occurred, if the Corporation does not receive a written notice of such
purported Transfer or Non-Transfer Event pursuant to subsection D.(5) of this
Article V.
F. Preemptive Rights. No holder of any stock or any other
securities of the Corporation, whether now or hereafter authorized, shall have
any preemptive right to subscribe for or purchase any stock or any other
securities of the Corporation other than such, if any, as the Board of
Directors, in its sole discretion, may determine and at such price or prices
and upon such other terms as the Board of Directors, in its sole discretion,
may fix; and any stock or other securities which the Board of Directors may
determine to offer for subscription may, as the Board of Directors in its sole
discretion shall determine, be offered to the holders of any class or series of
stock or other securities at the time outstanding to the exclusion of the
holders of any or all other classes or series of stock or other securities at
the time outstanding.
G. Amendment of this Article. Notwithstanding any other
provisions of this Charter or the Bylaws of the Corporation (and
notwithstanding that some lesser percentage may be permitted by law, this
Charter or the Bylaws of the Corporation), no provision of sections D., E. or
G. of this Article V shall be amended, altered, changed or repealed unless such
amendment, alteration, change, or repeal shall have been advised and approved
by the affirmative vote of a majority of the members of the Board of Directors
and adopted by the affirmative vote of the holders of not less than 66 2/3% of
the outstanding shares of capital stock of the Corporation entitled to vote on
such matter, voting together as a single class.
ARTICLE VI.
DIRECTORS
A. Number. The business and affairs of the Corporation shall be
managed under the direction of a Board of Directors consisting of not less than
three (3) nor more than nine (9)
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directors, unless otherwise determined from time to time by resolution adopted
by the affirmative vote of at least 80% of the members of the Board of
Directors; provided, however, that in no event shall the number of directors be
less than the minimum number required by the Maryland General Corporation Law
and provided further that so long as the number of stockholders of the
Corporation shall be less than three, the number of directors may be less than
three but not less than the number of stockholders. The name of the person who
will serve as the sole director of the Corporation until the first annual
meeting of the stockholders of the Corporation and until his successor is
elected and qualifies is Thomas J. Corcoran, Jr.
B. Classification of Directors. At the first annual meeting of
the stockholders of the Corporation, the directors of the Corporation shall be
divided into three classes: Class I; Class II; and Class III; and the number of
such directors in each class shall be as nearly equal as the number of such
directors will permit. Each such director shall serve for a three-year term
ending on the date of the third annual meeting of stockholders following the
annual meeting of stockholders at which such director was elected; provided,
however, that each initial director elected to Class I at the first annual
meeting of stockholders shall serve for a term ending on the date of the annual
meeting of stockholders to be held in 1998, each initial director elected to
Class II at the first annual meeting of stockholders shall serve for a term
ending on the date of the annual meeting of stockholders to be held in 1996,
and each initial director elected to Class III at the first annual meeting of
stockholders shall serve for a term ending on the date of the annual meeting of
stockholders held in 1997.
C. Removal. Any director or the entire Board of Directors may be
removed by the holders of a majority of the shares entitled to vote at an
election of directors; provided, however, any such removal shall be for cause;
and provided, further, that if stockholders of any class of the capital stock
of the Corporation are entitled separately to elect one or more directors, such
directors may not be removed except by the affirmative vote of a majority of
all of the shares of such class or series entitled to vote for such directors.
D. Vacancies. Except with respect to any directors who have been
or may be elected separately by the holders of Preferred Stock as provided for
in any Articles Supplementary, should a vacancy in the Board of Directors occur
or be created (whether as a result of the death, retirement, resignation or
removal from office of one or more directors or an increase in the number of
authorized directors), such vacancy shall be filled by the affirmative vote of
a majority of the remaining directors, even though less than a quorum of the
Board of Directors, and each director so elected shall serve for the unexpired
term of the Class to which he is elected. Any director so elected by the
remaining directors to fill a vacancy may qualify as an Independent Director
(as hereinafter defined) only if such director has received the affirmative
vote of at least a majority of the remaining Independent Directors, if any.
E. Independent Directors. Notwithstanding anything herein to the
contrary, at all times (except during a period not to exceed sixty (60) days
following the death, retirement, resignation or removal from office of a
director prior to the expiration of the director's term of office), a majority
of the Board of Directors shall be comprised of "Independent Directors," being
persons who are not officers or employees of the Corporation or "Affiliates" of
(1) any advisor to the Corporation under an advisory agreement, (2) any lessee
or contract manager of
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any property of the Corporation, any subsidiary of the Corporation or any
partnership which is an Affiliate of the Corporation.
For purposes of this subsection E., an "Affiliate" of a person
shall mean (1) any person that, directly or indirectly, controls or is
controlled by or is under common control with such person, (2) any other person
that beneficially owns, directly or indirectly, five percent (5%) or more of
the outstanding capital stock, shares or equity interests of such person, or
(3) any officer, director, employee, partner or trustee of such person or any
person controlling, controlled by or under common control with such person
(excluding trustees and persons serving in similar capacities who are not
otherwise an Affiliate of such person). For purposes of the definition of
Affiliate herein, (a) the term "person" shall mean and include individuals,
corporations, limited liability companies, general and limited partnerships,
stock companies or associations, joint ventures, associations, companies,
trusts, banks, trust companies, land trusts, business trusts, or other entities
and governments and agencies and political subdivisions thereof and (b) the
term "control" (including the correlative meanings of the terms "controlled by"
and "under common control with"), as used with respect to any person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such person, through the
ownership of voting securities, partnership interests or other equity
interests.
F. Ballots not Required. Elections of directors need not be by
ballot unless the Bylaws of the Corporation shall so provide.
G. Amendment of this Article. Notwithstanding any other
provisions of this Charter or the Bylaws of the Corporation (and
notwithstanding that some lesser percentage may be permitted by law, this
Charter or the Bylaws of the Corporation), the provisions of this Article VI
shall not be amended, altered, changed or repealed unless such amendment,
alteration, change, or repeal shall have been advised and approved by the
affirmative vote of at least 80% of the members of the Board of Directors and
approved by the affirmative vote of the holders of not less than 75% of the
outstanding shares of capital stock of the Corporation entitled to vote on such
matter, voting together as a single class.
ARTICLE VII.
REIT STATUS
The Corporation shall seek to elect and maintain its status as
a REIT under the Code. It shall be the duty of the Board of Directors to take
such actions as are permitted by law and as it may deem necessary or advisable
to cause the Corporation to satisfy the requirements for qualification as a
REIT under the Code, including, but not limited to, the requirements relating
to the ownership of its outstanding capital stock, the nature of its assets,
the sources of its income, and the amount and timing of its distributions to
its stockholders. The Board of Directors shall take no affirmative action to
cause the Corporation not to qualify as a REIT or to otherwise revoke the
Corporation's election to be taxed as a REIT without the affirmative vote of
the holders of 66 2/3% of the outstanding shares of capital stock of the
Corporation entitled to vote on such matter.
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ARTICLE VIII.
REGISTERED HOLDERS OF SHARES
Except as may be otherwise provided by applicable law, the
Corporation shall be entitled to treat the registered holder of any shares of
capital stock of the Corporation as the owner of such shares and of all rights
derived from or relating to such shares for all purposes, and the Corporation
shall not be obligated to recognize any equitable or other claim to or interest
in such shares or rights on the part of any other person, including, but
without limiting the generality of the term "person", a purchaser, pledgee,
assignee or transferee of such shares or rights, unless and until such person
becomes the registered holder of such shares. The foregoing shall apply
whether or not the Corporation shall have either actual or constructive notice
of the interest of such person.
ARTICLE IX.
LIMITATION ON INDEBTEDNESS
The Corporation may not incur or suffer to exist as of the end
of any month Indebtedness (as defined below) in an amount in excess of 40% of
the Corporation's investment in hotel properties, at its cost, after giving
effect to the Corporation's use of proceeds from any Indebtedness. The
Corporation's investment in hotel properties shall include all investments by
the Corporation constituting, evidencing or secured by an interest in property,
whether tangible or intangible and whether real, personal or mixed, that is
used or intended for use in, or in any manner connected with or relating to,
the ownership or leasing of hotels. In determining its cost of such
investments, there shall be included (1) the amount of all cash paid and the
value (as determined by the Board of Directors for purposes of such investment)
of any other property transferred therefor by the Corporation, (2) the amount
of all Indebtedness and other obligations assumed or incurred by the
Corporation or to which the Corporation takes subject, and (3) the value (as
determined by the Board of Directors for the purposes of such investment) of
all equity securities of which the issuer is an entity that is, or upon such
investment will be, included within the Corporation and which are issued
(otherwise than for cash) to, or retained by, any person other than the
Corporation in connection with such investment. For purposes of the foregoing
restrictions, (A) "Indebtedness" of the Corporation shall mean the consolidated
liabilities of the Corporation for borrowed money (including all notes payable
and drafts accepted representing extensions of credit) and all obligations
evidenced by bonds, debentures, notes or other similar instruments on which
interest charges are customarily paid, including obligations under capital
leases, and (B) "Corporation" shall mean this Corporation and any subsidiary
entity consolidated therewith, under generally accepted accounting principals.
ARTICLE X.
POWERS OF DIRECTORS; BYLAWS
A. Powers Vested in the Board of Directors. All of the
powers of the Corporation, insofar as the same may be lawfully vested by this
Charter in the Board of Directors, are hereby conferred upon the Board of
Directors. In furtherance and not in
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limitation of that power, the Board of Directors shall, in addition to those
powers specifically conferred upon the Board of Directors as set forth herein,
possess the following powers:
(1) The Board of Directors shall, in connection
with the exercise of its business judgment involving a Business Combination (as
defined in Section 3-601 of Title 3 of the Corporations and Associations
Article of the Annotated Code of Maryland) or any actual or proposed
transaction which would or may involve a change in control of the Corporation
(whether by purchases of shares of stock or any other securities of the
Corporation in the open market, or otherwise, tender offer, merger,
consolidation, dissolution, liquidation, sale of all or substantially all of
the assets of the Corporation, proxy solicitation or otherwise), in determining
what is in the best interests of the Corporation and its stockholders and in
making any recommendation to its stockholders, give due consideration to all
relevant factors, including, but not limited to (A) the economic effect, both
immediate and long-term, upon the Corporation's stockholders, including
stockholders, if any, who do not participate in the transaction; (B) the social
and economic effect on the employees, customers of, and other dealing with, the
Corporation and its subsidiaries and on the communities in which the
Corporation and its subsidiaries operate or are located; (C) whether the
proposal is acceptable based on the historical and current operating results or
financial condition of the Corporation; (D) whether a more favorable price
could be obtained for the Corporation's stock or other securities in the
future; (E) the reputation and business practices of the offeror and its
management and affiliates as they would affect the employees of the Corporation
and its subsidiaries; (F) the future value of the stock or any other securities
of the Corporation; (G) any antitrust or other legal and regulatory issues that
are raised by the proposal; and (H) the business and financial condition and
earnings prospects of the acquiring person or entity, including, but not
limited to, debt service and other existing financial obligations, financial
obligations to be incurred in connection with the acquisition, and other likely
financial obligations of the acquiring person or entity. If the Board of
Directors determines that any proposed Business Combination (as defined in
Section 3-601 of Title 3 of the Corporations and Associations Article of the
Annotated Code of Maryland) or actual or proposed transaction which would or
may involve a change in control of the Corporation should be rejected, it may
take any lawful action to defeat such transaction, including, but not limited
to, any or all of the following: advising stockholders not to accept the
proposal; instituting litigation against the party making the proposal; filing
complaints with governmental and regulatory authorities; acquiring the stock or
any of the securities of the Corporation; selling or otherwise issuing
authorized but unissued stock, other securities or granting options or rights
with respect thereto; acquiring a company to create an antitrust or other
regulatory problem for the party making the proposal; and obtaining a more
favorable offer from another individual or entity.
(2) The Board of Directors shall have the sole
and exclusive power and authority to make, alter or repeal the Bylaws of the
Corporation.
The enumeration and definition of particular powers of the Board of Directors
included in the foregoing shall in no way be limited to restricted by reference
to or inference from the terms of any other clause of this or any other Article
of the Charter of the Corporation, or construed as or deemed by inference or
otherwise in any manner to exclude or limit any powers conferred
-16-
<PAGE> 20
upon the Board of Directors under the General Laws of the State of Maryland now
or hereafter in force.
ARTICLE XI.
INDEMNIFICATION; LIMITATION OF LIABILITY
A. Power to Indemnify. The Corporation may agree to the terms
and conditions upon which any director, officer, employee or agent accepts his
office or position and in its Bylaws, by contract or in any other manner may
agree to indemnify and protect any director, officer, employee or agent of the
Corporation, or any person who serves at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, to the fullest extent permitted from time
to time by the Maryland General Corporation Law., as the same exists or may be
hereafter amended or reenacted.
B. Obligation to Provide Indemnification. The Corporation, to
the fullest extent permitted by the Maryland General Corporation Law as the
same exists or may hereafter be amended or reenacted, shall indemnify, and
advance expenses on behalf of, any and all persons who it shall have the power
to indemnify under such law from and against any and all of the expenses,
liabilities or other matters referred to in or covered by such law and, in
addition thereto, shall indemnify, and advance expenses on behalf of, all such
persons to the extent permitted under any Bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action by any
such person in his director or officer capacity and as to action in another
capacity while holding any such office, and shall continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person.
C. Limitation of Liability. To the fullest extent permitted by
Maryland statutory or decisional law, as amended or interpreted, no director or
officer of the Corporation shall be personally liable to the Corporation or its
stockholders for money damages. No amendment of the Charter of the Corporation
or repeal of any of its provisions shall limit or eliminate the benefits
provided to directors and officers under this provision with respect to any act
or omission which occurred prior to such amendment or repeal. Any repeal or
modification of the foregoing sentence shall not adversely affect any right or
protection of a director of the Corporation existing hereunder with respect to
any act or omission occurring prior to such repeal or modification.
ARTICLE XII.
BUSINESS COMBINATIONS
The provisions of Section 3-602 of Title 3 of the Corporations
and Associations Article of the Annotated Code of the State of Maryland, as the
same may be amended or reenacted, or any successor statute thereto, shall not
apply to any Business Combination (as defined in Section 3-601 of Title 3 of
the Corporations and Associations Article of the Annotated
-17-
<PAGE> 21
Code of the State of Maryland) involving the Corporation and FelCor Suite
Hotels, Inc., a Delaware corporation, Mr. Hervey A. Feldman or Thomas J.
Corcoran, Jr. (or any present or future affiliates or associates of Mr. Feldman
or Mr. Corcoran or other person acting in concert or as a group with either or
both of them).
ARTICLE XIII.
CONTROL SHARES
The provisions of Title 3, Subtitle 7 of the Maryland General
Corporation Law entitled "Voting Rights of Certain Control Shares," as amended
or reenacted from time to time, or any successor statute thereto, shall not
apply to any existing or future type or class of the capital stock of the
Corporation.
ARTICLE XIV.
REDUCED PERCENTAGE OF VOTES REQUIRED TO
APPROVE CERTAIN CORPORATE ACTIONS
Except as may be otherwise provided in the Charter of the
Corporation, notwithstanding any provision of law which may be applicable to
the Corporation which purports to require for any purpose the affirmative vote
of a greater proportion than a majority of all other votes entitled to be cast
on a particular matter by the holders of capital stock of the Corporation, the
affirmative vote of a majority of the votes entitled to be cast on any matter
upon which the holders of shares of the capital stock of the Corporation shall
be entitled to vote shall be, subject to the due authorization, approval or
advice or the Board of Directors, valid, sufficient and effective to approve or
authorize any such matter.
ARTICLE XV.
AMENDMENTS
The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Charter, in the manner now or hereafter
prescribed by statute, and all rights conferred upon stockholders herein are
granted subject to this reservation.
-18-
<PAGE> 22
STATE OF MARYLAND 370965
DEPARTMENT OF
ASSESSMENTS AND TAXATION
301 West Preston Street Baltimore, Maryland 21201
DATE: JUNE 23, 1995
THIS IS TO ADVISE YOU THAT THE ARTICLES OF MERGER FOR FELCOR SUITE HOTELS,
INC. (MD)-SURVIVOR AND FELCOR SUITE HOTELS, INC. (DE)-MERGING OUT WERE RECEIVED
AND APPROVED FOR RECORD ON JUNE 23, 1995 AT 12:24 PM.
FEE PAID: 50.00
[SEAL]
IRENE B WOZNY
CHARTER SPECIALIST
<PAGE> 23
ARTICLES OF MERGER
BETWEEN
FELCOR SUITE HOTELS, INC., A DELAWARE CORPORATION
AND
FELCOR SUITE HOTELS, INC., A MARYLAND CORPORATION
These ARTICLES OF MERGER are made and entered into as of the 23rd day of
June 1995, by and between FelCor Suite Hotels, Inc., a Delaware corporation
(the "Merging Corporation"), and FelCor Suite Hotels, Inc., a Maryland
corporation (the "Surviving Corporation"), each of which certify as follows:
FIRST: The Merging Corporation and the Surviving Corporation agree to
merge in accordance with the terms and conditions set forth herein and in the
Agreement and Plan of Merger dated as of May 30, 1995 by and between the
Surviving Corporation and the Merging Corporation (the "Merger").
SECOND: The Merger shall be effective upon the later of (i) the
acceptance of these Articles of Merger by the State Department of Assessments
and Taxation of the State of Maryland and (ii) the acceptance of a Certificate
of Merger by the Secretary of State of Delaware (the "Effective Date").
THIRD: The name of the Merging Corporation is "Felcor Suite Hotels,
Inc." which is incorporated under the laws of the State of Delaware. The name
of the Surviving Corporation is "Felcor Suite Hotels, Inc." which is
incorporated under the laws of the State of Maryland.
<PAGE> 24
FOURTH: The Merging Corporation was incorporated under the general laws
of the State of Delaware on May 16, 1994. The Merging Corporation is not
registered or qualified to do business in the State of Maryland.
FIFTH: The principal office in Maryland of the Surviving Corporation is
located in Baltimore City at 11 East Chase Street, Baltimore, Maryland, 21202.
The Merging Corporation does not have an office in Maryland.
SIXTH: Neither the Merging Corporation nor the Surviving Corporation
owns any interest in land in the State of Maryland, the title to which could be
affected by recording an instrument in the land records.
SEVENTH: The total number of shares of stock that the Merging Corporation
has authority to issue is 50,000,000 shares of Common Stock, par value $0.01
per share, and 10,000,000 shares of Preferred Stock, par value $0.01 per share.
The total number of shares of stock that the Surviving Corporation has
authority to issue is 50,000,000 shares of Common Stock, par value $0.01 per
share, and 10,000,000 shares of Preferred Stock, par value $0.01 per share.
EIGHTH: The Merging Corporation owns of record and beneficially all of
the issued and outstanding capital stock of the Surviving Corporation.
NINTH: The manner and basis of converting or exchanging issued stock of
the Merging Corporation and the Surviving Corporation into different stock of a
corporation or other
- 2 -
<PAGE> 25
consideration and the treatment of any issued stock not to be converted or
exchanged shall be as follows:
(a) At the Effective Date, each issued share of the Common Stock of
the Merging Corporation shall be converted into and become one share of Common
Stock, par value $0.01 per share, of the Surviving Corporation.
(b) At the Effective Date, each issued share of the Common Stock of
the Surviving Corporation shall be cancelled and cease to exist.
TENTH: The other provisions necessary to effect the Merger are as
follows:
(a) At the Effective Date, each share of the Common Stock of the
Merging Corporation issued and outstanding or held as treasury shares on the
Effective Date shall, without any action on the part of either the Merging
Corporation or the Surviving Corporation or any holder of such stock, be
changed and converted into an equal number of fully paid and nonassessable
shares of the Common Stock of the Surviving Corporation.
(b) Each stock certificate which, prior to the Effective Date,
represented issued shares of the Common Stock of the Merging Corporation shall
be and become, on the Effective Date, a certificate representing an identical
number of shares of Common Stock of the Surviving Corporation automatically by
virtue of the Merger and without any action on the part of the holder thereof.
(c) Each stock option granted by the Merging Corporation (under or
subject to the Restricted Stock and Stock Option Plan of the Merging
Corporation (the "1994 Plan")) and outstanding
- 3 -
<PAGE> 26
immediately prior to the Effective Date shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into and
become a stock option to purchase, upon the same terms and conditions, the
number of shares of the Surviving Corporation's Common Stock (subject to
further adjustment as may be provided in the 1994 Plan) which is equal to the
number of shares of the Merging Corporation's Common Stock which the holder
thereof would have received had such holder exercised the option in full
immediately prior to the Effective Date (whether or not such option was then
exercisable). The price per share payable upon exercise under each of said
options shall (subject to future adjustments as provided in the 1994 Plan) be
equal to the exercise price per share thereunder immediately prior to the
Effective Date. A number of shares of the Surviving Corporation's Common Stock
shall be reserved for issuance upon the exercise of options equal to the number
of shares of the Merging Corporation's Common Stock so reserved immediately
prior to the Effective Date.
(d) The 1994 Plan, and all outstanding stock options thereunder,
shall, immediately prior to the Effective Date of the Merger, be amended to the
extent necessary to permit continuance of the 1994 Plan and continuance and
convergence of said stock options into those of the Surviving Corporation
following the Merger, nothwithstanding any provisions heretofore contained in
such 1994 Plan.
(e) On the Effective Date, all of the shares of stock of the
Surviving Corporation issued and outstanding on the Effective
- 4 -
<PAGE> 27
Date of the Merger shall be cancelled and returned to the status of authorized
but unissued shares.
(f) On the Effective Date, each employee benefit plan and incentive
compensation plan to which the Merging Corporation is then a party shall be
assumed by, and continue to be the plan of, the Surviving Corporation. To the
extent any employee benefit plan or incentive compensation plan of the Merging
Corporation or any of its subsidiaries provides for the issuance or purchase
of, or otherwise relates to, the Merging Corporation's Common Stock, after the
Effective Date such plan shall be deemed to provide for the issuance or
purchase of, or otherwise relate to, the Surviving Corporation's Common Stock
upon the same terms and conditions.
(g) The officers and directors of the Surviving Corporation on the
Effective Date shall be and continue to be the officers and directors of the
Surviving Corporation thereafter, until their successors are duly appointed or
elected and qualify.
(h) The Charter and Bylaws of the Surviving Corporation, as they
exist immediately prior to the Effective Date, shall remain in effect as the
Charter and Bylaws of the Surviving Corporation thereafter, unaffected by the
Merger.
(i) On the Effective Date, the Merging Corporation shall be merged
with and into the Surviving Corporation, which shall continue its corporate
existence under the laws of the State of Maryland. The separate existence and
corporate organization of the Merging Corporation shall cease upon the
Effective Date, and the Surviving Corporation shall possess all of the rights,
privileges, immunities and franchises, as well as those of a public or of a
- 5 -
<PAGE> 28
private nature, of each of the Merging Corporation and the Surviving
Corporation; and all property, real, personal and mixed, and all debts due on
whatever account, including subscriptions to shares, and all other choses in
action, and all and every other interest, of or belonging to or due to each of
the Merging Corporation or the Surviving Corporation, shall be taken and deemed
to be transferred to and vested in the Surviving Corporation without further
act or deed; and the title to any real estate or any interest therein, vested
in either of the Merging Corporation or the Surviving Corporation shall not
revert or be in any way impaired by reason of such Merger. The Surviving
Corporation shall thenceforth be responsible and liable for all the liabilities
and obligations of each of the Merging Corporation and the Surviving
Corporation, and any claims existing or action or proceeding pending by or
against the Merging Corporation or the Surviving Corporation may be prosecuted
to judgment as if such Merger had not taken place. Neither the rights of
creditors nor any liens upon the property of either the Merging Corporation or
the Surviving Corporation shall be impaired by the Merger.
ELEVENTH: The terms and conditions of the transaction set forth in these
Articles of Merger were advised, authorized and approved by the Merging
Corporation in the manner and by the vote required by its charter and by-laws
and the laws of the State of Delaware. The terms and conditions of the
transaction set forth in these Articles of Merger were advised, authorized and
approved by the Surviving Corporation in the manner and by the vote required by
its charter and by-laws and the laws of the State of Maryland. The
- 6 -
<PAGE> 29
manner of approval by the Merging Corporation and the Surviving Corporation of
the transaction set forth in these Articles of Merger was as follows:
(a) The board of directors of the Merging Corporation adopted a
resolution by unanimous vote consent on April 10, 1995, which declared that the
transaction set forth in these Articles of Merger is advisable and directed
that the transaction be submitted for consideration by the stockholders of the
Merging Corporation at the annual meeting of the stockholders of the Merging
Corporation held on May 30, 1995. Notice which stated that a purpose of the
annual meeting was to act on the Merger contemplated by these Articles of
Merger was given in the manner required by the applicable provisions of the
Delaware General Corporation Law to each stockholder entitled to such notice.
The transaction set forth in these Articles of Merger was approved by the
stockholders of the Merging Corporation at the annual meeting of the
stockholders of the Merging Corporation held on May 30, 1995 by the affirmative
vote of a majority of all the votes entitled to be cast on the matter in
accordance with the Charter of the Merging Corporation and the Delaware General
Corporation,Law.
(b) The sole director of the Surviving Corporation adopted a resolution
by written consent as of May 2, 1995, which declared that the transaction set
forth in these Articles of Merger is advisable and directed that the
transaction be submitted for consideration of the sole stockholder of the
Surviving Corporation. The transaction set forth in these Articles of Merger
was approved
- 7 -
<PAGE> 30
by the sole stockholder of the Surviving Corporation by written consent dated
as of May 2, 1995.
TWELFTH: No amendment to the charter of the Surviving Corporation, the
survivor in the Merger, will be affected by the Merger.
IN WITNESS WHEREOF, the Merging Corporation and the Surviving Corporation
have caused these Articles of Merger to be signed in their respective corporate
names and on their behalf by their respective Presidents and attested to by
their respective corporate Secretaries as of the 23rd day of June, 1995.
ATTEST: FELCOR SUITE HOTELS, INC.,
a Maryland corporation
/s/ NICHOLAS R. PETERSON By: THOMAS J. CORCORAN
---------------------------- ----------------------------
Nicholas R. Peterson Thomas J. Corcoran, Jr.
Assistant Secretary President
FELCOR SUITE HOTELS, INC.,
a Delaware corporation
/s/ NICHOLAS R. PETERSON By: THOMAS J. CORCORAN
---------------------------- ----------------------------
Nicholas R. Peterson Thomas J. Corcoran, Jr.
Assistant Secretary President
The undersigned, being the duly elected and acting President of Felcor
Suite Hotels, Inc., a Maryland corporation, hereby acknowledges that the
foregoing Articles of Merger, of which this Certificate is a part, are the act
of Felcor Suite Hotels, Inc., a Maryland corporation, and certifies that, to
the best of his knowledge, information and belief, and under penalties for
perjury, all matters and facts contained in these Articles of Merger relating
to Felcor Suite Hotels, Inc., a Maryland corporation, are true in all material
respects.
/s/ THOMAS J. CORCORAN, JR.
----------------------------
Thomas J. Corcoran, Jr.
- 8 -
<PAGE> 31
The undersigned, being the duly elected and acting President of Felcor
Suite Hotels, Inc., a Delaware corporation, hereby acknowledges that the
foregoing Articles of Merger, of which this Certificate is a part, are the act
of Felcor Suite Hotels, Inc., a Delaware corporation, and certifies that, to
the best of his knowledge, information and belief, and under penalties for
perjury, all matters and facts contained in these Articles of Merger relating
to Felcor Suits Hotels, Inc., a Delaware corporation, are true in all material
respects.
/s/ THOMAS J. CORCORAN, JR.
----------------------------
Thomas J. Corcoran, Jr.
- 9 -
<PAGE> 32
STATE OF MARYLAND
441055
STATE DEPARTMENT OF
ASSESSMENTS AND TAXATION
301 West Preston Street Baltimore, Maryland 21201
DATE: MAY 02, 1996
THIS IS TO ADVISE YOU THAT THE ARTICLES SUPPLEMENTARY FOR
FELCOR SUITE HOTELS, INC.
WERE RECEIVED AND APPROVED FOR RECORD ON MAY 2, 1996 AT 11:40 AM.
FEE PAID: 50.00
[SEAL]
HARRY J. NOONAN
CHARTER SPECIALIST
<PAGE> 33
ARTICLES SUPPLEMENTARY
OF
FELCOR SUITE HOTELS, INC.
FELCOR SUITE HOTELS, INC., a Maryland corporation (hereinafter
referred to as the "Company"), hereby certifies as follows:
FIRST: Under the authority set forth in Article V of the Charter of
the Company, the Board of Directors of the Company on April 11, 1996,
classified 6,900,000 unissued shares of the "$1.95 Series A Cumulative
Convertible Preferred Stock."
SECOND: A description of the $1.95 Series A Cumulative Convertible
Preferred Stock (the "Series A Preferred Stock"), including the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption as set or
changed by the Board of Directors of the Company is as follows:
Section 1. NUMBER OF SHARES AND DESIGNATION. This series of
preferred stock shall be designated as Series A Cumulative Convertible
Preferred Stock, and 6,900,000 shall be the number of shares of preferred stock
constituting of such series.
Section 2. DEFINITIONS. For purposes of the Series A Preferred
Stock, the following terms shall have the meanings indicated:
"Act" shall have the meaning set forth in paragraph (g) of Section 5 hereof.
"Board of Directors" shall mean the Board of Directors of the Company or any
committee authorized by such Board of Directors to perform any of its
responsibilities with respect to the Series A Preferred Stock.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which state or federally chartered banking institutions in Texas or New York
are not required to be open.
"Call Date" shall have the meaning set forth in paragraph (c) of Section 5
hereof.
"Common Stock" shall mean the common stock of the Company, par value $0.01 per
share.
"Constituent Person" shall have the meaning set forth in paragraph (e) of
Section 7 hereof.
"Conversion Price" shall mean the conversion price per share of Common Stock
for which the Series A Preferred Stock is convertible, as such Conversion Price
may be adjusted pursuant to Section 7. The initial conversion price shall be
$32.25 (equivalent to a conversion rate of 0.7752 shares of Common Stock for
each share of Series A Preferred Stock).
<PAGE> 34
"Current Market Price" of publicly traded shares of Common Stock or any other
class of capital stock or other security of the Company or any other issuer for
any day shall mean the last reported sales price, regular way on such day, or,
if not sale takes place on such day, the average of the reported closing bid
and asked prices on such day, regular way, in either case as reported on the
New York Stock Exchange ("NYSE") or, if such security is not listed or admitted
for trading or, if not listed or admitted for trading on any national
securities exchange, on the National Market System of the National Association
of Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or, if such
security is not quoted on such National Market System, the average of the
closing bid and asked prices on such day in the over the counter market as
reported by NASDAQ or, if bid and asked prices for such security on such day
shall not have been reported through NASDAQ, the average of the bid and asked
prices on such day as furnished by any NYSE member firm regularly making a
market in such security selected for such purpose by the Chief Executive
Officer or the Board of Directors.
"Dividend Payment Date" shall mean the last calendar day of January, April,
July and October in each year, commencing on July 31, 1996; PROVIDED, HOWEVER,
that if any Dividend Payment Date falls on any day other than a Business Day,
the dividend payment due on such Dividend Payment Date shall be paid on the
Business Day immediately following such Dividend Payment Date.
"Dividend Periods" shall mean quarterly dividend periods commencing January 1,
March 1, June 1 and September 1 of each year and ending on and including the
day preceding the first day of the next succeeding Dividend Period (other than
the initial Dividend Period, which shall commence on May 6, 1996 and end on and
include June 30, 1996).
"Fair Market Value" shall mean the average of the daily Current Market Prices
of a share of Common Stock during the five (5) consecutive Trading Days
selected by the Company commencing not more than 20 Trading Days before, and
ending not later than, the earlier of the day in question and the day before
the "ex" date with respect to the issuance or distribution requiring such
computation. The term "'ex' date," when used with respect to any issuance or
distribution, means the first day on which the Common Stock trades regular way,
without the right to receive such issuance or distribution, on the exchange or
in the market, as the case may be, used to determine that day's current Market
Price.
"Issue Date" shall mean the date on which the Company first issues a share of
Series A Preferred Stock.
"Junior Stock" shall mean the Common Stock and any other class or series of
shares of the Company over which the Series A Preferred Stock has preference or
priority in the payment of dividends or in the distribution of assets on any
liquidation, dissolution or winding up of the Company.
"Non-Electing Share" shall have the meaning set forth in paragraph (e) of
Section 7 hereof.
"Parity Stock" shall have the meaning set forth in paragraph (b) of Section 8
hereof.
2
<PAGE> 35
"Permitted Common Stock Cash Distributions" means cash dividends and
distributions paid after December 31, 1995, not in excess of the Company's
cumulative undistributed net earnings at December 31, 1995, plus the cumulative
amount of funds from operations, as determined by the Board of Directors on a
basis consistent with the financial reporting practices of the Company, after
December 31, 1995, minus the cumulative amount of dividends accrued or paid on
the Series A Preferred Stock or any other class of Preferred Stock after
January 1, 1996.
"Person" shall mean any individual, partnership, limited liability company,
corporation or other entity, and shall include any successor (by merger or
otherwise) of such entity.
"Press Release" shall have the meaning set forth in paragraph (b) of Section 5
hereof.
"Securities" shall have the meaning set forth in paragraph (d) (iii) of Section
7 hereof.
"Series A Preferred Stock" shall have the meaning set forth in the Recitals
hereof.
"set apart for payment" shall be deemed to include, without any action other
than the following, the recording by the Company in its accounting ledgers of
any accounting or bookkeeping entry which indicates, pursuant to a declaration
of dividends or other distribution by the Board of Directors, the allocation of
funds to be so paid on any series or class of capital stock of the Company;
PROVIDED, HOWEVER, that if any funds for a class or series of Junior Stock or
any class or series of stock ranking on a parity with the Series A Preferred
Stock as to the payment of dividends are placed in a separate account of the
Company or delivered to a disbursing, paying or other similar agent, then "set
apart for payment" with respect to the Series A Preferred Stock shall mean
placing such funds in a separate account or delivering such funds to a
disbursing, paying or other similar agent.
"Trading Day" shall mean any day on which the securities in question are traded
on the NYSE, or if such securities are not listed or admitted for trading on
the NYSE, on the principal national securities exchange on which such
securities are listed or admitted, or if not listed or admitted for trading of
any national securities exchange, on the National Market System of NASDAQ, or
if such securities are not quoted on such National Market System, in the
applicable securities market in which the securities are traded.
"Transaction" shall have the meaning set forth in paragraph (e) of Section 7
hereof.
"Transfer Agent" means SunTrust Bank, Atlanta, Georgia, or such other agent or
agents of the Company as may be designated by the Board of Directors or their
designee as the transfer agent for the Series A Preferred Stock.
"Voting Preferred Stock" shall have the meaning set forth in Section 9(a)
hereof.
3
<PAGE> 36
Section 3. DIVIDENDS.
(a) The Holders of shares of the Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for that purpose, dividends payable in cash in an
amount per share of Series A Preferred Stock equal to the greater of $1.95 per
annum or the cash distributions declared or paid for the corresponding period
(determined on each Dividend Payment Date) on the number of shares of Common
Stock, or portion thereof, into which a share of Series A Preferred Stock is
convertible (under Section 7 hereof). Such dividends shall be cumulative from
May 6, 1996, whether or not in any Dividend Period or Periods there shall be
funds of the Company legally available for the payment of such dividends, and
shall be payable quarterly, when, as and if declared by the Board of Directors,
in arrears on Dividend Payment Dates, commencing on the first Dividend Payment
Date after the Issue Date. Each such dividend shall be payable in arrears to
the holders of record of shares of the Series A Preferred Stock, as they appear
on the stock records of the Company at the close of business on such record
dates, not more than 60 days preceding such Dividend Payment Dates thereof, as
shall be fixed by the Board of Directors. Accrued and unpaid dividends for any
past Dividend Periods may be declared and paid at any time, without reference
to any regular Dividend Payment Date, to holders of record on such date, not
exceeding 45 days preceding the payment date thereof, as may be fixed by the
Board of Directors.
(b) The amount of dividends payable for each full Dividend Period
for the Series A Preferred Stock shall be computed by dividing the annual
dividend rate by four. The amount of dividends payable for any period shorter
or longer than a full Dividend Period, on the Series A Preferred Stock shall be
computed on the basis of twelve 30-day months and a 360-day year. Holders of
the Preferred Stock shall not be entitled to any dividends, whether payable in
cash, property or stock, in excess of cumulative dividends, as herein provided,
on the Series A Preferred Stock. No interest, or sum of money in lieu of
interest, shall be payable in respect of any dividend payment or payments on
the Series A Preferred Stock that may be in arrears.
(c) So long as any shares of the Series A Preferred Stock are
outstanding, no dividends, except as described in the immediately following
sentence, shall be declared or paid or set apart for payment on any class or
series of Parity Stock for any period unless full cumulative dividends have
been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payment on the Series A
Preferred Stock for all Dividend Periods terminating on or prior to the
Dividend Payment Date on such class or series of Parity Stock. When dividends
are not paid in full or a sum sufficient for such payment is not set apart, as
aforesaid, all dividends declared upon shares of the Series A Preferred Stock
and all dividends declared upon any other class or series of Parity Stock shall
be declared ratably in proportion to the respective amounts of dividends
accumulated and unpaid on the Series A Preferred Stock and accumulated and
unpaid on such Parity Stock.
(d) So long as any shares of the Series A Preferred Stock are
outstanding, no dividends (other than dividends or distributions paid in shares
of, or options, warrants or rights to subscribe for or purchase shares of,
Junior Stock), shall be declared or paid or set apart for payment or other
distribution declared or made upon Junior Stock, nor shall Junior Stock be
redeemed, purchased or
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otherwise acquired (other than a redemption, purchase or other acquisition of
shares of Common Stock made for purposes of an employee incentive or benefit
plan of the Company or any subsidiary) for any consideration (or any moneys be
paid to or made available for a sinking fund for the redemption of any shares
of any such stock) by the Company, directly or indirectly (except by conversion
into or exchange for Junior Stock), unless in each case (i) the full cumulative
dividends on all outstanding shares of the Series A Preferred Stock and any
other Parity Stock of the Company shall have been paid or set apart for payment
for all past Dividend Periods with respect to the Series A Preferred Stock and
all past dividend periods with respect to such Parity Stock and (ii) sufficient
funds shall have been paid or set apart for the payment of the dividend for the
current Dividend Period with respect to the Series A Preferred Stock and the
current dividend period with respect to such Parity Stock. Notwithstanding the
foregoing limitations, the Company may at any time acquire shares of its
capital stock, without regard to rank, for the purpose of preserving its status
as a REIT.
Section 4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of
the Company, whether voluntary or involuntary, before any payment or
distribution of the assets of the Company (whether capital or surplus) shall be
made to or set apart for the holders of Junior Stock, the holders of the shares
of Series A Preferred Stock shall be entitled to receive twenty-five dollars
($25.00) per share of Series A Preferred Stock plus an amount equal to all
dividends (whether or not earned or declared) accrued and unpaid thereon to the
date of final distribution to such holders, but such holders shall not be
entitled to any further payment. If, upon any liquidation, dissolution or
winding up of the Company, the assets of the Company, or proceeds thereof,
distributable among the holders of the shares of Series A Preferred Stock shall
be insufficient to pay in full the preferential amount aforesaid and
liquidating payments on any other shares of any class or series of Parity
Stock, then such assets, or the proceeds thereof, shall be distributed among
the holders of shares of Series A Preferred Stock and any such other Parity
Stock ratably in accordance with the respective amounts that would be payable
on such shares of Series A Preferred Stock and any such other Parity Stock if
all amounts payable thereon were paid in full. For the purposes of this
Section 4, (i) a consolidation or merger of the Company with one or more
corporations, (ii) a sale or transfer of all or substantially all of the
Company's assets, or (iii) a statutory share exchange shall not be deemed to be
a liquidation, dissolution or winding up, voluntary or involuntary, of the
Company.
(b) Subject to the rights of the holders of shares of any series
or class or classes of stock ranking on a parity with or prior to the Series A
Preferred Stock upon liquidation, dissolution or winding up, upon any
liquidation, dissolution or winding up of the Company, after payment shall have
been made in full to the holders of the Series A Preferred Stock, as provided
in this Section 4, any other series or class or classes of Junior Stock shall,
subject to the respective terms and provisions (if any) applying thereto, be
entitled to receive any and all assets remaining to be paid or distributed, and
the holders of the Series A Preferred Stock shall not be entitled to share
therein.
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Section 5. REDEMPTION AT THE OPTION OF THE COMPANY
(a) The Series A Preferred Stock shall not be redeemable by the
Company prior to April 30, 2001. On and after April 30, 2001, the Company, at
its option, may redeem the shares of Series A Preferred Stock in whole or in
part, as set forth herein, subject to the provisions described below.
(b) The Series A Preferred Stock may be redeemed, in whole or in
part, at the option of the Company, at any time, only if for 20 Trading Days,
within any period of 30 consecutive Trading Days, including the last Trading
Day of such period, the Current Market Price of the Common Stock on each of
such 20 Trading Days equals or exceeds the Conversion Price in effect on such
Trading Day. In order to exercise its redemption option, the Company must
issue a press release announcing the redemption (the "Press Release") prior to
the opening of business on the second Trading Day after the condition in the
preceding sentence has, from time to time, been met. The Company may not issue
a Press Release prior to April 30, 2001. The Press Release shall announce the
redemption and set forth the number of shares of Series A Preferred Stock which
the Company intends to redeem. The Call Date shall be selected by the Company,
shall be specified in the notice of redemption and shall be not less than 30
days or more than 60 days after the date on which the Corporation issues the
Press Release.
(c) Upon redemption of Series A Preferred Stock by the Corporation
on the date specified in the notice to holders required under subparagraph (e)
of this Section 5 (the "Call Date"), each share of Series A Preferred Stock so
redeemed shall, at the option of the Company (i) be converted into a number of
shares of Common Stock equal to the liquidation preference (excluding any
accrued and unpaid dividends) of the shares of Series A Preferred Stock being
redeemed divided by the Conversion Price as of the opening of business on the
Call Date or (ii) be redeemed in cash at a price per share equal the aggregate
market value (determined as of the date of the notice of redemption) of the
number of shares of Common Stock into which the Series A Preferred Stock is
then convertible divided by the then current Conversion Price.
Upon any redemption of Series A Preferred Stock, the Company shall pay
any accrued and unpaid dividends in arrears for any full Dividend Period ending
on or prior to the Call Date. If the Call Date falls after a dividend payment
record date and prior to the corresponding Dividend Payment Date, then each
holder of Series A Preferred Stock at the close of business on such dividend
payment record date shall be entitled to the dividend payable on such shares on
the corresponding Dividend Payment Date. Except as provided above, the Company
shall make no payment or allowance for unpaid dividends, whether or not in
arrears, on shares of Series A Preferred Stock called for redemption or on the
shares of Common Stock issued upon such redemption.
(d) If full cumulative dividends on the Series A Preferred Stock
and any other class or series of Parity Stock of the Company have not been paid
or declared and set apart for payment, the Series A Preferred Stock may not be
redeemed in part and the Company may not purchase or acquire shares of Series A
Preferred Stock, otherwise than pursuant to a purchase or exchange offer made
on the same terms to all holders of shares of Series A Preferred Stock.
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(e) If the Company shall redeem shares of Series A Preferred Stock
pursuant to paragraph (a) of this Section 5, notice of such redemption shall be
given not more than four Business Days after the date on which the Corporation
issues the Press Release to each holder of record of the shares to be redeemed.
Such notice shall be provided by first class mail, postage prepaid, at such
holder's address as the same appears on the stock records of the Company, or by
publication in THE WALL STREET JOURNAL or THE NEW YORK TIMES, or if neither
such newspaper is then being published, any other daily newspaper of national
circulation. If the Company elects to provide such notice of publication, it
shall also promptly mail notice of such redemption to the holders of the Series
A Preferred Stock to be redeemed. Neither the failure to mail any notice
required by this paragraph (e), nor any defect therein or in the mailing
thereof, to any particular holder, shall affect the sufficiency of the notice
or the validity of the proceedings for redemption with respect to the other
holders. Any notice which was mailed in the manner herein provided shall be
conclusively presumed to have been duly given on the date mailed whether or not
the holder receives the notice. Each such mailed or published notice shall
state, as appropriate: (1) the Call Date: (2) the number of shares of Series A
Preferred Stock to be redeemed and, if fewer than all the shares held by such
holder are to be redeemed, the number of such shares to be redeemed from such
holder; (3) the number of shares of Common Stock to be issued, or the cash
redemption price, as the case may be, with respect to each share of Series A
Preferred Stock; (4) the place or places at which certificates for such shares
are to be surrendered for certificates representing shares of Common Stock; (5)
the then-current Conversion Price; and (6) that dividends on the shares to be
redeemed shall cease to accrue on such Call Date except as otherwise provided
herein. Notice having been published or mailed as aforesaid, from and after
the Call Date (unless the Company shall fail to make available a number of
shares of Common Stock or amount of cash necessary to effect such redemption),
(i) except as otherwise provided herein, dividends on the shares of the Series
A Preferred Stock so called for redemption shall cease to accrue, (ii) said
shares shall no longer be deemed to be outstanding, and (iii) all rights of the
holders thereof as holders of Series A Preferred Stock of the Company shall
cease (except the rights to receive the shares of Common Stock and cash payable
upon such redemption, without interest thereon, upon surrender and endorsement
of their certificates if so required to receive any dividends payable thereon).
The Company's obligation to provide shares of Common Stock and cash in
accordance with the preceding sentence shall be deemed fulfilled if, on or
before the Call Date, the Corporation shall deposit with a bank or trust
company (which may be an affiliate of the Company) that has an office in the
Borough of Manhattan, City of New York and that has, or is an affiliate of a
bank or trust company that has, a capital and surplus of at least $50,000,000,
shares of Common Stock and/or any cash necessary for such redemption, in trust,
with irrevocable instructions that such shares of Common Stock and/or cash be
applied to the redemption of the shares of Series A Preferred Stock so called
for redemption. At the close of business on the Call Date, each holder of
Series A Preferred Stock to be redeemed pursuant to Section 5(c)(i) (unless the
Company defaults in the delivery of the shares of Common Stock or cash payable
on such Call Date) shall be deemed to be the record holder of the number of
shares of Common Stock into which such Series A Preferred Stock is to be
redeemed, regardless of whether such holder has surrendered the certificates
representing the Series A Preferred Stock. No interest shall accrue for the
benefit of the holders of Series A Preferred Stock to be redeemed on any cash
so set aside by the Company. Subject to applicable escheat laws, any such cash
unclaimed at the end of two years from the Call Date shall
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<PAGE> 40
revert to the general funds of the Company, after which reversion the holders
of such shares so called for redemption shall look only to the general funds of
the Company for the payment of such cash.
As promptly as practicable after the surrender in accordance with said
notice of the certificates for any such shares so redeemed (properly endorsed
or assigned for transfer, if the Company shall so require and if the notice
shall so state), such shares shall be exchanged for certificates of shares of
Common Stock and any cash (without interest thereon) for which such shares have
been redeemed. If fewer than all the outstanding shares of Series A Preferred
Stock are to be redeemed, shares to be redeemed shall be selected by the
Company from outstanding shares of Series A Preferred Stock not previously
called for redemption by lot or pro rata (as nearly as may be) or by any other
method determine by the Company in its sole discretion to be equitable. If
fewer than all the shares of Series A Preferred Stock represented by any
certificate are redeemed, then new certificates representing the unredeemed
shares shall be issued without cost to the holder thereof.
(f) No fractional shares or scrip representing fractions of shares
of Common Stock shall be issued upon redemption of the Series A Preferred
Stock. Instead of any fractional interest in a share of Common Stock that
would otherwise be deliverable upon the redemption of a share of Series A
Preferred Stock, the Company shall pay to the holder of such share an amount in
cash (computed to the nearest cent) based upon the Current Market Price of
Common Stock on the Trading Day immediately preceding the Call Date. If more
than one share shall be surrendered for redemption at one time by the same
holder, the number of full shares of Common Stock issuable, or cash paid, upon
redemption thereof shall be computed on the basis of the aggregate number of
shares of Series A Preferred Stock so surrendered.
(g) The Company covenants that any shares of Common Stock issued
upon redemption of the Series A Preferred Stock shall be validly issued, fully
paid and non-assessable. The Company shall endeavor to list the shares of
Common Stock required to be delivered upon redemption to the Series A Preferred
Stock, prior to such redemption, upon each national securities exchange, if
any, upon which the outstanding Common Stock is listed at the time of such
delivery.
The Company shall endeavor to take any action necessary to ensure that
any shares of Common Stock issued upon the redemption of Series A Preferred
Stock are freely transferable and not subject to any resale restrictions under
the Securities Act of 1933, as amended (the "Act"), of any applicable state
securities or blue sky laws (other than any shares of Common Stock issued upon
redemption of any Series A Preferred Stock which are held by an "affiliate" (as
defined in Rule 144 under the Act) of the Company). Notwithstanding the
foregoing limitations, the Company may at any time acquire shares of its
capital stock, without regard to rank, for the purpose of preserving its status
as a REIT.
Section 6. SHARES TO BE RETIRED.
All shares of Series A Preferred Stock which shall have been issued
and reacquired in any manner by the Company shall be restored to the status of
authorized but unissued shares of Preferred Stock, without designation as to
series. The Company may also retire any unissued shares of
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<PAGE> 41
Series A Preferred Stock, and such shares shall then be restored to the status
of authorized but unissued shares of Preferred Stock, without designation as to
series.
Section 7. CONVERSION.
Holders of shares of Series A Preferred Stock shall have the right to
convert all or a portion of such shares in to shares of Common Stock, as
follows:
(a) Subject to and upon compliance with the provisions of this
Section 7, a holder of shares of Series A Preferred Stock shall have the right,
at his or her option, at any time to convert such shares into the number of
fully paid and non-assessable shares of Common Stock obtained by dividing the
aggregate liquidation preference (excluding any accrued and unpaid dividends)
of such shares by the Conversion Price (as in effect at the time and on the
date provided for in the last paragraph or paragraph (b) of this Section 7) by
surrendering such shares to be converted, such surrender to be made in the
manner provided in Section 7, paragraph (b); PROVIDED, HOWEVER, that the right
to convert shares called for redemption pursuant to Section 5 shall terminate
at the close of business on the Call Date fixed for such redemption, unless the
Company shall default in making payment of the shares of Common Stock and any
cash payable upon such redemption under Section 5 hereof.
(b) In order to exercise the conversion right, the holder of each
share of Series A Preferred Stock to be converted shall surrender the
certificate representing such share, duly endorsed or assigned to the Company
or in blank, at the office of the Transfer Agent; accompanied by written notice
to the Company that the holder thereof elects to convert such Series A
Preferred Stock. Unless the shares issuable on conversion are to be issued in
the same name as the name in which such share of Series A Preferred Stock is
registered, each share surrendered for conversion shall be accompanied by
instruments of transfer, in form satisfactory to the Company, duly executed by
the holder or such holder's duly authorized attorney and an amount sufficient
to pay any transfer or similar tax (or evidence reasonably satisfactory to the
Company demonstrating that such taxes have been paid).
Holders of shares of Series A Preferred Stock at the close of business
on a dividend payment record date shall be entitled to receive the dividend
payable on such shares on the corresponding Dividend Payment Date
notwithstanding the conversion thereof following such dividend payment record
date and prior to such Dividend Payment date. However, shares of Series A
Preferred Stock surrendered for conversion during the period between the close
of business on any dividend payment record date and the opening of business on
the corresponding Dividend Payment Date (except shares converted after the
issuance of notice of redemption with respect to a Call Date during such
period, such shares of Series A Preferred Stock being entitled to such dividend
on the Dividend Payment Date) must be accompanied by a payment of an amount
equal to the dividend payable on such shares on such Dividend Payment Date. A
holder of shares of Series A Preferred Stock on a dividend payment record date
who (or whose transferee) tenders any such shares for conversion into shares of
Common Stock on such Dividend Payment Date will receive the dividend payable by
the Company on such shares of Series A Preferred Stock on such date, and the
converting holder need not include
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payment of the amount of such dividend upon surrender of shares of Series A
Preferred Stock for conversion. Except as provided above, the Company shall
make no payment or allowance for unpaid dividends, whether or not in arrears,
on converted shares or for dividends on the shares of Common Stock issued upon
such conversion.
As promptly as practicable after the surrender of certificates for
shares of Series A Preferred Stock as aforesaid, the Company shall issue and
shall deliver at such office to such holder, or on his or her written order, a
certificate or certificates for the number of full shares of Common Stock
issuable upon the conversion of such shares in accordance with provisions of
this Section 7, and any factional interest in respect of a share of Common
Stock arising upon such conversion shall be settled as provided in paragraph
(c) of this Section 7.
Each conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which certificates for shares of
Series A Preferred Stock shall have been surrendered and such notice (and if
applicable, payment of an amount equal to the dividend payable on such shares)
received by the Company as aforesaid, and the person or persons in whose name
or names any certificate or certificates for shares of Common Stock shall be
issuable upon such conversion shall be deemed to have become the holder or
holders of record of the shares represented thereby at such time on such date
and such conversion shall be at the Conversion Price in effect at such time on
such date unless the stock transfer books of the Company shall be closed on
that date, in which event such person or persons shall be deemed to have become
holder or holders of record at the close of business on the next succeeding day
on which such stock transfer books are open, but such conversion shall be at
the Conversion Price in effect on the date on which such shares shall have been
surrendered and such notice received by the Company.
(c) No fractional shares of scrip representing of shares of Common
Stock shall be issued upon conversion of the Shares A Preferred Stock. Instead
of any fractional interest in a share of Common Stock that would otherwise be
deliverable upon the conversion of a share of Series A Preferred Stock, the
Company shall pay to the holder of such share an amount in cash based upon the
Current Market Price of Common Stock on the Trading Day immediately preceding
the date of conversion. If more than one share shall be surrendered for
conversion at one time by the same holder, the number of full shares of Common
Stock issuable upon conversion thereof shall be computed on the basis of the
aggregate number of shares of Series A Preferred Stock so surrendered.
(d) The Conversion Price shall be adjusted from time to time as
follows:
(i) If the Company shall after the Issue Date (A) pay a
dividend or make a distribution of its capital stock in shares of its Common
Stock, (B) subdivide its outstanding Common Stock into a greater number of
shares, (C) combine its outstanding Common Stock into a smaller number of
shares or (D) issue any shares of capital stock by reclassification of its
Common Stock, the Conversion Price in effect at the opening of business on the
following day following the date fixed for the determination of stockholders
entitled to receive such dividend or distribution or at the opening of business
on the day following the day on which such subdivision, combination or
reclassification becomes effective, as the case may be, shall be adjusted so
that the holder of any share
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of Series A Preferred Stock thereafter surrendered for conversion shall be
entitled to receive the number of shares of Common Stock that such holder would
have owned or have been entitled to receive after the happening of any of the
events described above had such shares of Series A Preferred Stock been
converted immediately prior to the record date in the case of a dividend or
distribution or the effective date in the case of a subdivision, combination or
reclassification. An adjustment made pursuant to this subparagraph (i) shall
become effective immediately after the opening of business on the day next
following the record date (except as provided in paragraph (h) below) in the
case of a dividend or distribution and shall become effective immediately after
the opening of business on the day next following the effective date in the
case of a subdivision, combination or reclassification.
(ii) If the Company shall, after the Issue Date, issue
rights, options or warrants to all holders of Common Stock entitling them (for
a period expiring within 45 days after the record date mentioned below) to
subscribe for or purchase Common Stock at a price per share less than the Fair
Market Value per share of Common Stock on the record date for the determination
of stockholders entitled to receive such rights or warrants, then the
Conversion Price in effect at the opening of business on the day next following
such record date shall be adjusted to equal the price determined by multiplying
(I) the Conversion Price in effect immediately prior to the opening of business
on the day following the date fixed for such determination by (II) a fraction,
the numerator of which shall be the sums of (A) the number of shares of Common
Stock outstanding on the close of business on the date fixed for such
determination and (B) the number of shares that the aggregate proceeds to the
Company from the exercise of such rights or warrants for Common Stock would
purchase at such Fair Market Value, and the denominator of which shall be the
sums of (A) the number of Shares of Common Stock outstanding on the close of
business on the date fixed for such determination and (B) on the number of
additional shares of Common Stock offered for subscription or purchase pursuant
to such rights or warrants. Such adjustment shall become effective immediately
after the opening of business on the day next following such record date
(except as provided in paragraph (h) below). In determining whether any rights
or warrants entitle the holders of Common Stock to subscribe for or purchase
shares of Common Stock at less than such Fair Market Value, there shall be
taken into account any consideration received by the Company upon issuance and
upon exercise of such rights warrants, the value of such consideration, if
other than cash, to be determined by the Chief Executive Officer or the Board
of Directors.
(iii) If the Company shall distribute to all holders of its
Common Stock any shares of capital stock of the Company (other than Common
Stock) or evidence of its indebtedness or assets (excluding Permitted Common
Stock Cash Distributions) or rights warrants to subscribe for or purchase any
of its securities (excluding those rights and warrants issued to all holders of
Common Stock entitling them for a period expiring within 45 days after the
record date referred to in subparagraph (ii) above to subscribe for or purchase
Common Stock, which rights and warrants are referred to in and treated under
subparagraph (ii) above) (any of the foregoing being hereinafter in this
subparagraph (iii) called the "Securities"), then in each such case the
Conversion Price shall be adjusted so that it shall equal the price determined
by multiplying (I) the Conversion Price in effect immediately prior to the
close of business on the date fixed for the determination of stockholders
entitled to receive such distribution by (II) a fraction, the numerator of
which shall be the Fair Market Value per share of the Common Stock on the
record date mentioned below less the then fair market
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value (as determined by the Chief Executive Officer or the Board of Directors,
whose determination shall be conclusive), of the portion of the capital stock
or assets or evidences of indebtedness so distributed or of such rights or
warrants applicable to one share of Common Stock, and the denominator of which
shall be the Fair Market Value per share of the Common Stock on the record date
mentioned below. Such adjustment shall become effective immediately at the
opening of business on the Business Day next following (except as provided in
paragraph (h) below) the record date for the determination of shareholders
entitled to receive such distribution. For the purposes of this clause (iii),
the distribution of a Security, which is distributed not only to the holders of
the Common Stock on the date fixed for the determination of stockholders
entitled to such distribution of such Security, but also is distributed with
each share of Common Stock delivered to a Person converting a share of Series A
Preferred Stock after such determination date, shall not require an adjustment
of the Conversion Price pursuant to this clause (iii); PROVIDED that on the
date, if any, on which a person converting a share of Series A Preferred Stock
would no longer be entitled to receive such Security with a share of Common
Stock (other than as a result of the termination of all such Securities), a
distribution of such Securities shall be deemed to have occurred and the
Conversion Price shall be adjusted ass provided in this clause (iii) and such
day shall be deemed to be "the date fixed for the determination of the
stockholders entitled to receive such distribution" and "the record date"
within the meaning of the two preceding sentences.
(iv) No adjustment in the Conversion Price shall be
required unless such adjustment would require a cumulative increase or decrease
of at least 1% in such; PROVIDED, HOWEVER, that any adjustments that by reason
of this subparagraph (iv) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment until made; and PROVIDED,
FURTHER, that any adjustment shall be required and made in accordance with the
provisions of this Section 7 (other than this subparagraph (iv) not later than
such time as may be required in order to preserve the tax-free nature of a
distribution to the holders of shares of Common Stock. Notwithstanding any
other provisions of this Section 7, the Company shall not be required to make
any adjustment of the Conversion Price for the issuance of any shares of Common
Stock pursuant to any plan providing for the reinvestment of dividends or
interest payable on securities of the Company and the investment of additional
optional amounts in shares of Common Stock under such plan. All calculations
under this Section 7 shall be made to the nearest cent (with $.005 being
rounded upward) or to the nearest one-tenth of a share (with .05 of a share
being rounded upward), as the case may be. Anything in this paragraph (d) to
the contrary notwithstanding, the Company shall be entitled, to the extent
permitted by law, to make such reductions in the Conversion Price, in addition
to those required by this paragraph (d), as it in its discretion shall
determine to be advisable in order that any stock dividends, subdivision of
shares, reclassification or combination of shares, distribution of rights or
warrants to purchase stock or securities, or a distribution or other assets
(other than cash dividends) hereafter made by the Company to its stockholders
shall not be taxable, or if that is not possible, to diminish any income taxes
that are otherwise payable because of such event.
(e) If the Company shall be a party to any transaction (including
without limitation a merger, consolidation, statutory share exchange, self
tender offer for all or substantially all shares of Common Stock, sale of all
or substantially all of the Company's assets or recapitalization of the
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Common Stock and excluding any transaction as to which subparagraph (d)(i) of
this Section 7 applies) (each of the foregoing being referred to herein as a
"Transaction"), in each case as a result of which shares of Common Stock shall
be converted into the right to receive stock, securities or other property
(including cash or any combination thereof), each share of Series A Preferred
Stock which is not converted into the right to receive stock, securities or
other property in connection with such Transaction shall thereafter be
convertible into the kind and amount of shares of stock, securities and other
property (including cash or any combination thereof) receivables upon the
consummation of such Transaction by a holder of that number of shares of Common
Stock into which one share of Series A Preferred Stock was convertible
immediately prior to such Transaction, assuming such holder of Common Stock (i)
is not a Person with which the Company consolidated or into which the Company
merged or which merged into the Company or to which such sale or transfer was
made, as the case may be ("Constituent Person"), or an affiliate of a
Constituent Person and (ii) failed to exercise his rights of election, if any,
as to the kind of amount of stock, securities and other property (including
cash) receivable upon such Transaction (provided that if the kind or amount of
stock, securities and other property (including cash) receivable upon such
Transaction is not the same for each share of Common Stock of the Company held
immediately prior to such Transaction by other than a Constituent Person or an
affiliate thereof and in respect of which such rights of election shall not
have been exercised ("Non-Electing Share"), then for the purpose of this
paragraph (e) the kind and amount of stock, securities and other property
(including cash) receivable upon such Transaction by each Non-electing Share
shall be deemed to be the kind and amount so receivable per share by a
plurality of the non-election shares). The Company shall not be a party to any
Transaction unless the terms of such Transaction are consistent with the
provisions of this paragraph (e), and it shall not consent or agree to the
occurrence of any Transaction until the Company has entered into an agreement
with the successor or purchasing entity, as the case may be, for the benefit of
the holders of the Series A Preferred Stock that will contain provisions
enabling the holders of the Series A Preferred Stock that remains outstanding
after such Transaction to convert into the consideration received by holders of
Common Stock at the Conversion Price in effect immediately prior to such
Transaction. The provisions of the paragraph (e) shall similarly apply to
successive Transactions.
(f) If:
(i) the Company shall declare a dividend (or any other
distribution) on the Common Stock (other than Permitted Common Stock Cash
Distributions); or
(ii) the Company shall authorize the granting to the
holders of the Common Stock of rights or warrants to subscribe for or purchase
any shares of any class or any other rights or warrants; or
(iii) there shall be any reclassification of the Common
Stock (other than any event to which subparagraph (d)(i) of this Section 7
applies) or any consolidation or merger to which the Company is a party and for
which approval of any stockholders of the Company is required, or a statutory
share exchange, or self tender offer by the Company for all or substantially
all of its outstanding shares of Common Stock or the sale or transfer of all
substantially all of the assets of the Company as an entity; or
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<PAGE> 46
(iv) there shall occur the involuntary liquidation,
dissolution or winding up of the Company,
then the Company shall cause to be filed with the Transfer Agent and shall
cause to be mailed to the holders of shares of the Service A Preferred Stock at
their addresses as shown on the stock records of the Company, as promptly as
possible, but at least 15 days prior to the applicable date hereinafter
specified, a notice stating (A) the date on which a record is to be taken for
the purpose of such dividend, distribution or rights or warrants, or, if a
record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution or rights or warrants are
to be determined or (B) the date on which such reclassification, consolidation,
merger, statutory share exchange, sale, transfer, liquidation, dissolution or
winding up is expected to become effective, and the date as of which it is
expected that holders of Common Stock record shall be entitled to exchange
their shares of Common Stock for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger, statutory share
exchange, sale, transfer, liquidation, dissolution or winding up. Failure to
give or receive such notice of any defect therein shall not affect the legality
or validity of the proceedings described in this Section 7.
(g) Whenever the Conversion Price is adjusted as herein provided,
the Company shall promptly file with the Transfer Agent an officer's
certificate setting forth the Conversion Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment which
certificate shall be conclusive evidence of the correctness of such adjustment
absent manifest error. Promptly after delivery of such certificate, the
Company shall prepare a notice of such adjustment of the Conversion Price
setting forth the adjusted Conversion Price and the effective date of such
adjustment becomes effective and shall mail such notice of such adjustment of
the Conversion Price to the holder of each share of Series A Preferred Stock at
such holder's last address as shown on the stock records of the Company.
(h) In any case in which paragraph (d) of this Section 7 provides
that an adjustment shall become effective on the day next following the record
date for an event, the Company may defer until the occurrence of such event (A)
issuing to the holder of any share of Series A Preferred Stock converted after
such record date and before the occurrence of such event the additional shares
of Common Stock issuable upon such conversion by reason of the adjustment
required by such event over and above the Common Stock issuable upon such
conversion before giving effect to such adjustment and (B) paying to such
holder any amount of cash in lieu of any fraction pursuant to paragraph (c) of
this Section 7.
(i) There shall be no adjustment of the Conversion Price in case
of the issuance of any stock of the Company in a reorganization, acquisition or
other similar transaction except as specifically set forth in this Section 7.
If any action or transaction would require adjustment of the Conversion Price
pursuant to more than one paragraph of this Section 7, only one adjustment
shall be made and such adjustment shall be the amount of adjustment that has
the highest absolute value.
(j) If the Company shall take any action affecting the Common
Stock, other than action described in this Section 7, that in the opinion of
the Board of Directors would materially adversely
14
<PAGE> 47
affect the conversion rights of the holders of the shares of Series A Preferred
Stock, the Conversion Price for the Series A Preferred Stock may be adjusted,
to the extent permitted by law, in such manner, if any, and at such time, as
the Board of Directors, in its sole discretion, may determine to be equitable
in the circumstances.
(k) The Company covenants that it will at all times reserve and
keep available, free form preemptive rights, out the aggregate of its
authorized but unissued shares of Common Stock for the purpose of effecting
conversion of the Series A Preferred Stock, the full number of shares of Common
Stock deliverable upon the conversion of all outstanding shares of Series A
Preferred Stock not theretofore converted. For purposes of this paragraph (k),
the number of shares of Common Stock shall be deliverable upon the conversion
of all outstanding shares of Series A Preferred Stock shall be computed as if
at the time of computation all such outstanding shares were held by a single
holder.
The Company covenants that any shares of Common Stock issued upon the
conversion of the Series A Preferred Stock shall be validly issued, fully paid
and non-assessable.
The Company shall endeavor to list the shares of Common Stock required
to be delivered upon conversion of the Series A Preferred Stock, prior to such
delivery, upon each national securities exchange, if any, upon which the
outstanding Common Stock is listed at the time of such delivery.
Prior to the delivery of any securities that the Company shall be
obligated to deliver upon conversion of the Series A Preferred Stock, the
Company shall endeavor to comply with all federal and state laws and
regulations thereunder requiring the registration of such securities with, or
any approval of or consent to the delivery thereof, by any governmental
authority.
(l) The Company will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of shares
of Common Stock or other securities or property on conversion of the Series A
Preferred Stock pursuant hereto; PROVIDED, HOWEVER, that the Company shall not
be required to pay any tax that may be payable in respect of any transfer
involved in the issue or delivery of shares of Common Stock or other securities
or property in a name other than that of the holder of the Series A Preferred
Stock to be converted, and no such issue or delivery shall be made unless and
until the person requesting such issue or delivery has paid to the Company the
amount of any such tax or established, to the reasonable satisfaction of the
Company, that such tax has been paid.
Section 8. RANKING. Any class or series of stock of the Company
shall be deemed to rank:
(a) prior to the Series A Preferred Stock, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation, dissolution
or winding up, as the case may be, in preference or priority to the holders of
Series A Preferred Stock;
15
<PAGE> 48
(b) on a parity with the Series A Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof be different from
those of the Series A Preferred Stock, if the holders of such class of stock or
series and the Series A Preferred Stock shall be entitled to the receipt of
dividends and of amounts distributable upon liquidation, dissolution or winding
up in proportion to their respective amounts of accrued and unpaid dividends
per share or liquidation preferences, without preference or priority one over
the other ("Parity Stock"); the Series A Preferred Stock and the Series B
Preferred Stock shall be Parity Stock with respect to the Series A Preferred
Stock; and
(c) junior to the Series A Preferred Stock, as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution or
winding up, if such stock or series shall be Common Stock or if the holders of
Series A Preferred Stock shall be entitled to receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, as the case
may be, in preference or priority to the holders of shares of such stock or
series.
Section 9. VOTING.
(a) If and whenever six quarterly dividends (whether or not
consecutive) payable on the Series A Preferred Stock or any series or class of
Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, the number of directors then constituting
the Board of Directors shall be increased by two (if not already increased by
reason of a similar arrearage with respect to any Parity Stock) and the holders
of shares of Series A Preferred Stock, together with the holders of shares of
every other series of Parity Stock (any such other series, the "Voting
Preferred Stock"), voting as a single class regardless of series, shall be
entitled to elect the two additional directors to serve on the Board of
Directors at any annual meeting of stockholders or special meeting held in
place thereof, or at a special meeting of the holders of the Series A Preferred
Stock and the Voting Preferred Stock called as hereinafter provided. Whenever
all arrears in dividends on the Series A Preferred Stock and the Voting
Preferred Stock then outstanding shall have been paid and dividends thereon for
the current quarterly dividend period shall have been paid or declared and set
apart for payment, then the right of the holders of the Series A Preferred
Stock and the Voting Preferred Stock to elect such additional two directors
shall cease (but subject always to the same provision for the vesting of such
voting rights in the case of any similar future arrearages in six quarterly
dividends), and the terms of office of all persons elected as directors by the
holders of the Series A Preferred Stock and the Voting Preferred Stock shall
forthwith terminate and the number of the Board of Directors shall be reduced
accordingly. At any time after such voting power shall have been so vested in
the holders of shares of Series A Preferred Stock and the Voting Preferred
Stock, the secretary of the Company may, and upon the written request of any
holder of Series A Preferred Stock (addressed to the secretary at the principal
office of the corporation) shall, call a special meeting of the holders of the
Series A Preferred Stock and of the Voting Preferred Stock for the election of
the two directors to be elected by them as herein provided, such call to be
made by notice similar to that provided in the Bylaws of the Company for a
special meeting of the stockholders or as required by law. If any such special
meeting required to be called as above provided shall not be called by the
16
<PAGE> 49
secretary within 20 days after receipt of any such request, then any holder of
shares of Series A Preferred Stock may call such meeting, upon the notice above
provided, and for that purpose shall have access to the stock books of the
Company. The directors elected at any such special meeting shall hold office
until the next annual meeting of the stockholders or special meeting held in
lieu thereof if such office shall not have previously terminated as above
provided. If any vacancy shall occur among the directors elected by the
holders of the Series A Preferred Stock and the Voting Preferred Stock, a
successor shall be elected by the Board of Directors, upon the nomination of
the then- remaining director elected by the holders of the Series A Preferred
Stock and the Voting Preferred Stock or the successor of such remaining
director, to serve until the next annual meeting of the stockholders or special
meeting held in place thereof if such office shall not have previously
terminated as provided above.
(b) So long as any shares of Series A Preferred Stock are
outstanding, in addition to any other vote or consent of stockholders required
by law or by the Charter, as amended, the affirmative vote of at least 66 2/3%
of the votes entitled to be cast by the holders of the shares of Series A
Preferred Stock and the Voting Preferred Stock, at the time outstanding, acting
as a single class regardless of series, at any meeting called for the purpose,
shall be necessary for effecting or validation:
(i) Any amendment, alteration or repeal of any of the
provisions of these Articles Supplementary that materially adversely affects
the voting powers, rights or preferences of the holders of the Series A
Preferred Stock or the Voting Preferred Stock; PROVIDED, HOWEVER, that the
amendment of the provisions of the Charter so as to authorize or create, or to
increase the authorized amount, of any Junior Stock or any shares of any class
ranking on a parity with the Series A Preferred Stock or the Voting Preferred
Stock shall not be deemed to materially adversely affect the voting powers,
rights or preferences of the holders of Series A Preferred Stock, and PROVIDED,
FURTHER, that if any such amendment, alteration or repeal would materially
adversely affect any voting powers, rights of preferences of the Series A
Preferred Stock or another series of Voting Preferred Stock that are not
enjoyed by some or all of the other series which otherwise would be entitled to
vote in accordance herewith, the affirmative vote of least 66 2/3% of the votes
entitled to be cast by holders of all series similarly affected, similarly
given, shall be required in lieu of the affirmative vote of at least 66 2/3% of
the votes entitled to be cast by the holders of the shares of Series A
Preferred Stock and the Voting Preferred Stock which otherwise would be
entitled to vote in accordance herewith; or
(ii) The authorization or creation of, or the increase in
the authorized amount of, any shares of any class or any security convertible
into shares of any class ranking prior to the Series A Preferred Stock in the
distribution of assets on any liquidation, dissolution or winding up of the
Company or in the payment of dividends; PROVIDED, HOWEVER, that no such vote of
the holders of Series A Preferred Stock shall be required if, at or prior to
the time when such amendment, alteration or repeal is to take effect, or when
the issuance of any such prior shares of convertible security is to be made, as
the case may be, provision is made for the redemption of all shares of Series A
Preferred Stock at the time outstanding.
17
<PAGE> 50
For purposes of the foregoing provisions of this Section 9, each share
of Series A Preferred Stock shall have one (1) vote per share, except that when
any other series of preferred stock shall have the right to vote with the
Series A Preferred Stock as a single class on any matter, then the Series A
Preferred Stock and such other series shall have with respect to such matters
one (1) vote per $25.00 of stated liquidation preference. Except as otherwise
required by applicable law or as set forth herein, the shares of Series A
Preferred Stock shall not have any relative, participating, optional or other
special voting rights and powers other than as set forth herein, and the
consent of the holders thereof shall not be required for the taking of any
corporate action.
Section 10. RECORD HOLDERS. The Company and the Transfer Agent may
deem and treat the record holder of any shares of Series A Preferred Stock as
the true and lawful owner thereof for all purposes, and neither the Company nor
the Transfer Agent shall be affected by any notice to the contrary.
IN WITNESS WHEREOF, the Company has caused these Articles
Supplementary to be signed in its name and on its behalf on this 30th day of
April, 1996, by its President who acknowledges that these Articles
Supplementary are the act of the Company and that to the best of his knowledge,
information and belief and under penalties for perjury all matters and facts
contained in these Articles Supplementary are true in all material respects.
FELCOR SUITE HOTELS, INC.
By: /s/ THOMAS J. CORCORAN, JR.
---------------------------------
Name: Thomas J. Corcoran, Jr.
----------------------------
Title: President
---------------------------
Attest:
/s/ THOMAS L. WIESE
------------------------------------
Name: Thomas L. Wiese
----------------------------
Title: Secretary
----------------------------
(Corporate Seal)
18
<PAGE> 51
STATE OF MARYLAND
465025
STATE DEPARTMENT OF
ASSESSMENTS AND TAXATION
301 West Preston Street Baltimore, Maryland 21201
DATE: AUGUST 09, 1996
THIS IS TO ADVISE YOU THAT THE ARTICLES OF AMENDMENT FOR
FELCOR SUITE HOTELS, INC.
WERE RECEIVED AND APPROVED FOR RECORD ON AUGUST 9, 1996 AT 10:10 AM.
FEE PAID: 50.00
[SEAL]
HARRY J. NOONAN
CHARTER SPECIALIST
<PAGE> 52
ARTICLES OF AMENDMENT
OF
FELCOR SUITE HOTELS, INC.
FelCor Suite Hotels, Inc., a Maryland corporation (the "Corporation"),
certifies as follows:
FIRST: The Corporation desires to amend its Charter as currently in
effect.
SECOND: Article V of the Charter of the Corporation is hereby amended
as set forth below:
(1) the phrase "Except as provided in subsection D.(9) of this
Article V," contained in section D.(2)(b) of Article V shall be
amended to read "Except as provided in subsections D.(9) and D.(12) of
this Article V,"; (2) the phrase "Notwithstanding any other provisions
herein," contained in each of sections D.(2)(c) through D.(2)(f) of
Article V shall be amended to read "Notwithstanding any other
provisions herein, except for subsection D.(12) of this Article V,";
(3) the phrase "Nothing contained in this Article V" contained in
section D.(7) of Article V shall be amended to read "Except for the
provisions of subsection D.(12), nothing contained in this Article V";
and (4) a new section D.(12) shall be added to Article V, providing in
its entirety as follows:
"(12) New York Stock Exchange Transactions.
Nothing in this amended and restated Charter shall prohibit
the settlement of any transaction entered into through the
facilities of the New York Stock Exchange. The immediately
preceding sentence shall not limit the authority of the Board
of Directors to take any and all actions it deems necessary or
advisable to protect the Corporation and the interests of its
stockholders in preserving the Corporation's status as a REIT,
so long as such actions do not prohibit the settlement of any
transactions entered into through the facilities of the New
York Stock Exchange."
THIRD: The amendment of the Corporation's Charter set forth in these
Articles of Amendment was advised by the Board of Directors of the Corporation
and was approved by the shareholders of the Corporation.
<PAGE> 53
IN WITNESS WHEREOF, the Corporation has caused these Articles of
Amendment to be executed in its name and on its behalf on the 8th day of
August, 1996, by its Senior Vice President, who acknowledges that these
Articles of Amendment are the act of the Corporation and certifies that, to the
best of his knowledge, information and belief and under penalties for perjury,
all matters and facts contained in these Articles of Amendment are true in all
material respects.
ATTEST: FELCOR SUITE HOTELS, INC.
/s/ THOMAS L. WIESE By: /s/ LAWRENCE D. ROBINSON (SEAL)
- ----------------------------- -----------------------------
Thomas L. Wiese Lawrence D. Robinson
Assistant Secretary Senior Vice President
-2-
<PAGE> 54
STATE OF MARYLAND
544239
STATE DEPARTMENT OF
ASSESSMENTS AND TAXATION
301 West Preston Street Baltimore, Maryland 21201
DATE: JUNE 24, 1997
THIS IS TO ADVISE YOU THAT THE ARTICLES OF AMENDMENT FOR
FELCOR SUITE HOTELS, INC.
WERE RECEIVED AND APPROVED FOR RECORD ON JUNE 24, 1997 AT 10:13 AM.
FEE PAID: 50.00
[SEAL]
JOSEPH V. STEWART
CHARTER SPECIALIST
<PAGE> 55
ARTICLES OF AMENDMENT
OF JUNE 24, 1997
FELCOR SUITE HOTELS INC.
FelCor Suite Hotels, Inc., a Maryland corporation (the "Corporation"),
certifies as follows:
FIRST: The Corporation desires to amend its Charter as currently in effect.
SECOND: Article IX of the Charter of the Corporation is hereby amended as
set forth below:
The following shall be deleted:
ARTICLE IX
Limitation on Indebtedness
The Corporation may not incur or suffer to exist as of the end of any
month Indebtedness (as defined below) in an amount in excess of 40% of the
Corporation's investment in hotel properties, at its cost, after giving
effect to the Corporation's use of proceeds from any Indebtedness. The
Corporation's investment in hotel properties shall include all investments
by the Corporation constituting, evidencing or secured by an interest in
property, whether tangible or intangible and whether real, personal or
mixed, that is used or intended for use in, or in any manner connected
with or relating to, the ownership or leasing of hotels. In determining
its cost of such investments, there shall be included (1) the amount of
all cash paid and the value (as determined by the Board of Directors for
purposes of such investment) of any other property transferred therefor
by the Corporation, (2) the amount of all Indebtedness and other
obligations assumed or incurred by the Corporation or to which the
Corporation takes subject, and (3) the value (as determined by the Board
of Directors for the purposes of such investment) of all equity securities
of which the issuer is an entity that is, or upon such investment will be,
included within the Corporation and which are issued (otherwise than for
cash) to, or retained by, any person other than the Corporation in
connection with such investment. For purposes of the foregoing
restriction, (A) "Indebtedness" of the Corporation shall mean the
consolidated liabilities of the Corporation for borrowed money (including
all notes payable and drafts accepted representing extensions of credit)
and all obligations evidenced by bonds, debentures, notes or similar
instruments on which interest charges are customarily paid, including
obligations under capital leases, and (B) "Corporation" shall mean this
Corporation and any subsidiary entity consolidated therewith, under
generally accepted accounting principals.
<PAGE> 56
THIRD: The amendment of the Corporation's Charter set forth in these
Articles of Amendment was advised by the Board of Directors of the Corporation
and was approved by the shareholders of the Corporation.
-2-
<PAGE> 57
IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment
to be executed in its name and on its behalf on the 16th day of June, 1997, by
its Senior Vice President, who acknowledges that these Articles of Amendment
are the act of the Corporation and certifies that, to the best of his
knowledge, information and belief and under penalties for perjury, all matters
and facts contained in these Articles of Amendment are true in all material
respects.
ATTEST: FELCOR SUITE HOTELS, INC.
/s/ THOMAS L. WIESE By: /s/ LAWRENCE D. ROBINSON (SEAL)
---------------------------- ----------------------------
Thomas L. Wiese Lawrence D. Robinson
Assistant Secretary Senior Vice President
3
<PAGE> 58
STATE OF MARYLAND
581905
STATE DEPARTMENT OF
ASSESSMENTS AND TAXATION
301 West Preston Street Baltimore, Maryland 21201
DATE: NOVEMBER 13, 1997
THIS IS TO ADVISE YOU THAT THE ARTICLES OF AMENDMENT FOR
FELCOR SUITE HOTELS, INC.
WERE RECEIVED AND APPROVED FOR RECORD ON NOVEMBER 10, 1997 AT 7:38 AM.
FEE PAID: 140.00
[SEAL]
JOSEPH V. STEWART
CHARTER SPECIALIST
<PAGE> 59
ARTICLES OF AMENDMENT
TO
ARTICLES OF AMENDMENT AND RESTATEMENT
OF
FELCOR SUITE HOTELS, INC.
The undersigned, on behalf of FelCor Suite Hotels, Inc., a Maryland
corporation, (the "Corporation"), hereby certifies as follows:
FIRST: The Corporation desires to amend its Charter as currently in
effect.
SECOND: Paragraph A of Article V of the Charter of the Corporation is
hereby amended to read in its entirety as follows:
"A. Authorized Shares. The total number of shares of capital stock
that the Corporation shall have authority to issue is One Hundred Ten
Million (110,000,000) shares, consisting of One Hundred Million
(100,000,000) shares of Common Stock, of the par value of One Cent ($0.01)
each, and Ten Million (10,000,000) shares of Preferred Stock, of the par
value of One Cent ($0.01) each, amounting in aggregate par value to One
Million One Hundred Thousand Dollars ($1,100,000.00)."
THIRD: The total number of shares of stock that the Corporation had
authority to issue immediately prior to this amendment is Sixty Million
(60,000,000) shares, consisting of Fifty Million (50,000,000) shares of Common
Stock, par value $.01 per share, and Ten Million Shares (10,000,000) shares of
Preferred Stock, par value $.01 per share, amounting in aggregate par value to
$600,000. The total number of shares of stock that the Corporation has
authority to issue immediately following this amendment is One Hundred and Ten
Million (110,000,000) shares, consisting of One Hundred Million (100,000,000)
shares of Common Stock, par value $.01 per share, and Ten Million Shares
(10,000,000) of Preferred Stock, par value $.01 per share, amounting in
aggregate par value to $1,100,000. The description of each class, including the
preferences,
<PAGE> 60
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption is not
changed by this amendment.
FOURTH: The amendment of the Corporation's Charter set forth in these
Articles of Amendment was advised by the Board of Directors of the Corporation
and was approved by the stockholders of the Corporation.
IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment
to be executed in its name and on its behalf on the 30th day of October, 1997,
by Lawrence D. Robinson, its Senior Vice President, Secretary and General
Counsel, who acknowledges that these Articles of Amendment are the act of the
Corporation and certifies that, to the best of his knowledge, information and
belief and under penalties for perjury, all matters and facts contained in
these Articles of Amendment are true in all material respects.
ATTEST: FELCOR SUITE HOTELS, INC.
/s/ THOMAS L. WIESE By: /s/ LAWRENCE D. ROBINSON
- ---------------------------- -------------------------
Thomas L. Wiese Lawrence D. Robinson
Assistant Secretary Senior Vice President,
Secretary & General Counsel
-2-
<PAGE> 61
STATE DEPARTMENT OF ASSESSMENTS
AND TAXATION
APPROVED FOR RECORD
5/6/98 AT 11:36 a.m.
ARTICLES SUPPLEMENTARY
OF
FELCOR SUITE HOTELS, INC.
FELCOR SUITE HOTELS, INC., a Maryland corporation (hereinafter
referred to as the "Company"), hereby certifies as follows:
FIRST: Under the authority set forth in Article V of the Charter of
the Company, the Board of Directors of the Company on April 20, 1998, and April
30, 1998, classified 57,500 unissued shares of the Preferred Stock as "9%
Series B Cumulative Redeemable Preferred Stock."
SECOND: A description of the 9% Series B Cumulative Redeemable
Preferred Stock, including the preferences and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption as set or changed by the Board of Directors of the
Company is as follows:
Section 1. NUMBER OF SHARES AND DESIGNATION. This series of
preferred stock shall be designated as 9% Series B Cumulative Redeemable
Preferred Stock (the "Series B Preferred Stock"), and 57,500 shall be the
number of shares of Preferred Stock constituting such series.
Section 2. DEFINITIONS. For purposes of the Series B Preferred
Stock, the following terms shall have the meanings indicated:
"Board of Directors" shall mean the Board of Directors of the Company or any
committee authorized by such Board of Directors to perform any of its
responsibilities with respect to the Series B Preferred Stock.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which state or federally chartered banking institutions in Texas or New York
are not required to be open.
"Call Date" shall have the meaning set forth in paragraph (c) of Section 5
hereof.
"Common Stock" shall mean the common stock of the Company, par value $0.01 per
share.
"Dividend Payment Date" shall mean the last calendar day of January, April,
July and October in each year, commencing on July 31, 1998; PROVIDED, HOWEVER,
that if any Dividend Payment Date falls on any day other than a Business Day,
the dividend payment due on such Dividend Payment Date shall be paid on the
Business Day immediately following such Dividend Payment Date.
"Dividend Periods" shall mean quarterly dividend periods commencing February 1,
May 1, August 1, and November 1 of each year and ending on and including the
day preceding the first day of the next succeeding Dividend Period (other than
the initial Dividend Period, which shall commence on May 7, 1998 and end on and
include July 31, 1998).
"Issue Date" shall mean the date on which the Company first issues a share of
Series B Preferred Stock.
[STAMP]
<PAGE> 62
"Junior Stock" shall mean the Common Stock and any other class or series of
shares of the Company over which the Series B Preferred Stock has preference or
priority in the payment of dividends or in the distribution of assets on any
liquidation, dissolution or winding up of the Company.
"Parity Stock" shall have the meaning set forth in paragraph (b) of Section 8
hereof.
"Series A Preferred Stock" shall mean the Company's $1.95 Series A Cumulative
Convertible Preferred Stock.
"Series B Preferred Stock" shall have the meaning set forth in Section 1
hereof.
"set apart for payment" shall be deemed to include, without any action other
than the following, the recording by the Company in its accounting ledgers of
any accounting or bookkeeping entry which indicates, pursuant to a declaration
of dividends or other distribution by the Board of Directors, the allocation of
funds to be so paid on any series or class of capital stock of the Company;
PROVIDED, HOWEVER, that if any funds for a class or series of Junior Stock or
any class or series of stock ranking on a parity with the Series B Preferred
Stock as to the payment of dividends are placed in a separate account of the
Company or delivered to a disbursing, paying or other similar agent, then "set
apart for payment" with respect to the Series B Preferred Stock shall mean
placing such funds in a separate account or delivering such funds to a
disbursing, paying or other similar agent.
"Transfer Agent" means SunTrust Bank, Atlanta, Georgia, or such other agent or
agents of the Company as may be designated by the Board of Directors or their
designee as the transfer agent for the Series B Preferred Stock.
"Voting Preferred Stock" shall have the meaning set forth in Section 9(a)
hereof.
Section 3. DIVIDENDS.
(a) The Holders of shares of the Series B Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for that purpose, dividends payable in cash in an
amount per share of Series B Preferred Stock equal to $225.00 per annum. Such
dividends shall be cumulative from May 7, 1998, whether or not in any Dividend
Period or Periods there shall be funds of the Company legally available for the
payment of such dividends, and shall be payable quarterly, when, as and if
declared by the Board of Directors, in arrears on Dividend Payment Dates,
commencing on the first Dividend Payment Date after the Issue Date. Each such
dividend shall be payable in arrears to the holders of record of shares of the
Series B Preferred Stock, as they appear on the stock records of the Company at
the close of business on such record dates, not more than 60 days preceding
such Dividend Payment Dates thereof, as shall be fixed by the Board of
Directors. Accrued and unpaid dividends for any past Dividend Periods may be
declared and paid at any time, without reference to any regular Dividend
Payment Date, to holders of record on such date, not exceeding 45 days
preceding the payment date thereof, as may be fixed by the Board of Directors.
(b) The amount of dividends payable for each full Dividend Period
for the Series B Preferred Stock shall be computed by dividing the annual
dividend rate by four. The amount of
- 2 -
<PAGE> 63
dividends payable for any period shorter or longer than a full Dividend Period,
on the Series B Preferred Stock shall be computed on the basis of a 360-day
year consisting of twelve 30-day months. Holders of the Series B Preferred
Stock shall not be entitled to any dividends, whether payable in cash, property
or stock, in excess of cumulative dividends, as herein provided, on the Series
B Preferred Stock. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on the Series B
Preferred Stock that may be in arrears.
(c) So long as any shares of the Series B Preferred Stock are
outstanding, no dividends, except as described in the immediately following
sentence, shall be declared or paid or set apart for payment on any class or
series of Parity Stock for any period unless full cumulative dividends have
been or contemporaneously are declared and paid, or declared and a sum
sufficient for the payment thereof set apart for such payment on the Series B
Preferred Stock for all Dividend Periods terminating on or prior to the
Dividend Payment Date on such class or series of Parity Stock. When dividends
are not paid in full or a sum sufficient for such payment is not set apart, as
aforesaid, all dividends declared upon shares of the Series B Preferred Stock
and all dividends declared upon any other class or series of Parity Stock shall
be declared ratably in proportion to the respective amounts of dividends
accumulated and unpaid on the Series B Preferred Stock and accumulated and
unpaid on such Parity Stock.
(d) So long as any shares of the Series B Preferred Stock are
outstanding, no dividends (other than dividends or distributions paid in shares
of, or options, warrants or rights to subscribe for or purchase shares of,
Junior Stock), shall be declared or paid or set apart for payment or other
distribution declared or made upon Junior Stock, nor shall Junior Stock be
redeemed, purchased or otherwise acquired (other than a redemption, purchase or
other acquisition of shares of Common Stock made for purposes of an employee
incentive or benefit plan of the Company or any subsidiary) for any
consideration (or any moneys be paid to or made available for a sinking fund
for the redemption of any shares of any such stock) by the Company, directly or
indirectly, unless in each case (i) the full cumulative dividends on all
outstanding shares of the Series B Preferred Stock and any other Parity Stock
of the Company shall have been paid or set apart for payment for all past
Dividend Periods with respect to the Series B Preferred Stock and all past
dividend periods with respect to such Parity Stock and (ii) sufficient funds
shall have been paid or set apart for the payment of the dividend for the
current Dividend Period with respect to the Series B Preferred Stock and the
current dividend period with respect to such Parity Stock. Notwithstanding the
foregoing limitations, the Company may at any time acquire shares of its
capital stock, without regard to rank, for the purpose of preserving its status
as a real estate investment trust ("REIT").
Section 4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of
the Company, whether voluntary or involuntary, before any payment or
distribution of the assets of the Company (whether capital or surplus) shall be
made to or set apart for the holders of Junior Stock, the holders of the shares
of Series B Preferred Stock shall be entitled to receive two thousand five
hundred dollars ($2,500.00) per share of Series B Preferred Stock plus an
amount equal to all dividends (whether or not earned or declared) accrued and
unpaid thereon to the date of final distribution to such holders, but such
holders shall not be entitled to any further payment. If, upon any
liquidation, dissolution or winding up of the Company, the assets of the
Company, or proceeds thereof, distributable among the
- 3 -
<PAGE> 64
holders of the shares of Series B Preferred Stock shall be insufficient to pay
in full the preferential amount aforesaid and liquidating payments on any other
shares of any class or series of Parity Stock, then such assets, or the
proceeds thereof, shall be distributed among the holders of shares of Series B
Preferred Stock and any such other Parity Stock ratably in accordance with the
respective amounts that would be payable on such shares of Series B Preferred
Stock and any such other Parity Stock if all amounts payable thereon were paid
in full. For the purposes of this Section 4, (i) a consolidation or merger of
the Company with one or more corporations, (ii) a sale or transfer of all or
substantially all of the Company's assets, or (iii) a statutory share exchange
shall not be deemed to be a liquidation, dissolution or winding up, voluntary
or involuntary, of the Company.
(b) Subject to the rights of the holders of shares of any series
or class or classes of stock ranking on a parity with or prior to the Series B
Preferred Stock upon liquidation, dissolution or winding up, upon any
liquidation, dissolution or winding up of the Company, after payment shall have
been made in full to the holders of the Series B Preferred Stock, as provided
in this Section 4, any other series or class or classes of Junior Stock shall,
subject to the respective terms and provisions (if any) applying thereto, be
entitled to receive any and all assets remaining to be paid or distributed, and
the holders of the Series B Preferred Stock shall not be entitled to share
therein.
Section 5. REDEMPTION AT THE OPTION OF THE COMPANY.
(a) The Series B Preferred Stock shall not be redeemable by the
Company prior to May 7, 2003. On and after May 7, 2003, the Company, at its
option, may redeem the shares of Series B Preferred Stock in whole or in part,
as set forth herein, subject to the provisions described below.
(b) The Series B Preferred Stock may be redeemed, in whole or in
part, at the option of the Company, at any time or from time to time, upon not
less than 30 nor more than 60 days' prior written notice. In order to exercise
its redemption option, the Company must issue a press release announcing the
redemption (the "Press Release"). The Company may not issue a Press Release
prior to May 7, 2003. The Press Release shall announce the redemption and set
forth the number of shares of Series B Preferred Stock which the Company
intends to redeem. The Call Date shall be selected by the Company, shall be
specified in the notice of redemption and, subject to the provisions of Section
5(e) below, shall be not less than 30 days or more than 60 days after the date
on which the Company issues the Press Release.
(c) Upon redemption of Series B Preferred Stock by the Company on
the date specified in the notice to holders required under subparagraph (e) of
this Section 5 (the "Call Date"), each share of Series B Preferred Stock to be
redeemed shall be redeemed in cash at a price per share equal to $2,500.00 per
share, plus all accrued and unpaid distributions thereon to the Call Date,
without interest, to the extent that the Company has funds legally available
therefor. The redemption price of the Series B Preferred Stock (other than any
portion thereof consisting of accrued and unpaid distributions) must be paid
solely from the sale proceeds of other capital stock of the Company and not
from any other source. For purposes of the foregoing sentence, "capital stock"
means any common stock, preferred stock, depositary shares, interests,
participations, or other ownership interests (however designated) and any
rights (other than debt securities convertible into or exchangeable for equity
securities) or options to purchase any of the foregoing. Dividends payable on
the shares of Series B Preferred Stock for any period greater or less than a
full dividend period
- 4 -
<PAGE> 65
will be computed on the basis of a 360-day year consisting of twelve 30-day
months. Except as provided above, the Company shall make no payment or
allowance for unpaid dividends, whether or not in arrears, on shares of Series
B Preferred Stock called for redemption or on the shares of capital stock
issued upon such redemption.
(d) If full cumulative dividends on the Series B Preferred Stock
and any other class or series of Parity Stock of the Company have not been paid
or declared and set apart for payment, the Series B Preferred Stock may not be
redeemed in part and the Company may not purchase or acquire shares of Series B
Preferred Stock, otherwise than pursuant to a purchase or exchange offer made
on the same terms to all holders of shares of Series B Preferred Stock.
(e) If the Company shall redeem shares of Series B Preferred Stock
pursuant to paragraph (a) of this Section 5, notice of such redemption shall be
given to the beneficial holders of the Series B Preferred Stock by the Company
not less than thirty Business Days before the Call Date. Such notice shall be
provided by first class mail, postage prepaid, at such holder's address as the
same appears on the stock records of the Company, or by publication in THE WALL
STREET JOURNAL or THE NEW YORK TIMES, or if neither such newspaper is then
being published, any other daily newspaper of national circulation. If the
Company elects to provide such notice by publication, it shall also promptly
mail notice of such redemption to the holders of the Series B Preferred Stock
to be redeemed. Neither the failure to mail any notice required by this
paragraph (e), nor any defect therein or in the mailing thereof, to any
particular holder, shall affect the sufficiency of the notice or the validity
of the proceedings for redemption with respect to the other holders. Any notice
which was mailed in the manner herein provided shall be conclusively presumed
to have been duly given on the date mailed whether or not the holder receives
the notice. Each such mailed or published notice shall state, as appropriate:
(1) the Call Date: (2) the number of shares of Series B Preferred Stock to be
redeemed from such holder; (3) the redemption price; (4) the place or places
where the Series B Preferred Stock is to be surrendered for payment of the
redemption price; and (5) that dividends on the shares to be redeemed shall
cease to accrue on such Call Date except as otherwise provided herein. Notice
having been published or mailed as aforesaid, from and after the Call Date
(unless the Company shall fail to make available the amount of cash necessary
to effect such redemption), (i) except as otherwise provided herein, dividends
on the shares of the Series B Preferred Stock so called for redemption shall
cease to accrue, (ii) said shares shall no longer be deemed to be outstanding,
and (iii) all rights of the holders thereof as holders of Series B Preferred
Stock of the Company shall cease (except the rights to receive the cash payable
upon such redemption, without interest thereon, upon surrender and endorsement
of their certificates). The Company's obligation to provide cash in accordance
with the preceding sentence shall be deemed fulfilled if, on or before the Call
Date, the Company shall deposit with a bank or trust company (which may be an
affiliate of the Company) that has an office in the Borough of Manhattan, City
of New York and that has, or is an affiliate of a bank or trust company that
has, a capital and surplus of at least $50,000,000, any cash necessary for such
redemption, in trust, with irrevocable instructions that such cash be applied
to the redemption of the shares of Series B Preferred Stock so called for
redemption. At the close of business on the Call Date, each share Series B
Preferred Stock to be redeemed pursuant to Section 5(c)(i) (unless the Company
defaults in the delivery of the cash payable on such Call Date) shall be deemed
to be no longer outstanding regardless of whether such holder has surrendered
the certificates representing the Series B Preferred Stock. No interest shall
accrue for the benefit of the holders of Series B Preferred Stock to be
redeemed on any cash so set aside by the Company. Subject to applicable escheat
laws,
- 5 -
<PAGE> 66
any such cash unclaimed at the end of two years from the Call Date (together
with any interest or other earnings accrued thereon) shall revert to the
general funds of the Company, after which reversion the holders of such shares
so called for redemption shall look only to the general funds of the Company
for the payment of such cash, and shall have no right to interest from and
after the Call Date.
As promptly as practicable after the surrender in accordance with said
notice of the certificates for any such shares so redeemed (properly endorsed
or assigned for transfer, if the Company shall so require and if the notice
shall so state), such shares shall be exchanged for cash (without interest
thereon) for which such shares have been redeemed. If fewer than all the
outstanding shares of Series B Preferred Stock are to be redeemed, shares to be
redeemed shall be selected by the Company from outstanding shares of Series B
Preferred Stock not previously called for redemption by lot or pro rata (as
nearly as may be) or by any other method determined by the Company in its sole
discretion to be equitable. If fewer than all the shares of Series B Preferred
Stock represented by any certificate are redeemed, then new certificates
representing the unredeemed shares shall be issued without cost to the holder
thereof.
(f) Notwithstanding the foregoing, the Company may at any time
acquire shares of its capital stock, without regard to rank, for the purpose of
preserving its status as a REIT, for purposes of an employee benefit plan of
the Company, or in accordance with the conversion or redemption provisions of
any class of Preferred Stock ranking on parity with or senior to the Series B
Preferred Stock.
(g) The procedures for redeeming any depositary receipts
evidencing fractional interests in the Series B Preferred Stock shall be the
same as the procedures for redeeming the Series B Preferred Stock contained in
this Section 5 except that the depositary agent that issued the depositary
receipts being redeemed may act on behalf of the Company.
Section 6. SHARES TO BE RETIRED.
All shares of Series B Preferred Stock which shall have been issued
and reacquired in any manner by the Company shall be restored to the status of
authorized but unissued shares of Preferred Stock, without designation as to
series. The Company may also retire any unissued shares of Series B Preferred
Stock, and such shares shall then be restored to the status of authorized but
unissued shares of Preferred Stock, without designation as to series.
Section 7. CONVERSION.
Holders of shares of Series B Preferred Stock shall have no conversion
rights.
Section 8. RANKING. Any class or series of stock of the Company
shall be deemed to rank:
(a) prior to the Series B Preferred Stock, as to the payment of
dividends and as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation, dissolution
- 6 -
<PAGE> 67
or winding up, as the case may be, in preference or priority to the holders of
Series B Preferred Stock;
(b) on a parity with the Series B Preferred Stock, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof be different from
those of the Series B Preferred Stock, if the holders of such class of stock or
series and the Series B Preferred Stock shall be entitled to the receipt of
dividends and of amounts distributable upon liquidation, dissolution or winding
up in proportion to their respective amounts of accrued and unpaid dividends
per share or liquidation preferences, without preference or priority one over
the other ("Parity Stock"); the Series A Preferred Stock shall be Parity Stock
with respect to the Series B Preferred Stock; and
(c) junior to the Series B Preferred Stock, as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution or
winding up, if such stock or series shall be Common Stock or if the holders of
Series B Preferred Stock shall be entitled to receipt of dividends or of
amounts distributable upon liquidation, dissolution or winding up, as the case
may be, in preference or priority to the holders of shares of such stock or
series.
Section 9. VOTING.
(a) If and whenever six quarterly dividends (whether or not
consecutive) payable on the Series B Preferred Stock or any series or class of
Parity Stock shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not earned or declared, the number of directors then constituting
the Board of Directors shall be increased by two (if not already increased by
reason of a similar arrearage with respect to any Parity Stock) and the holders
of shares of Series B Preferred Stock, together with the holders of shares of
every other series of Parity Stock (any such other series, the "Voting
Preferred Stock"), voting as a single class regardless of series, shall be
entitled to elect the two additional directors to serve on the Board of
Directors at any annual meeting of stockholders or special meeting held in
place thereof, or at a special meeting of the holders of the Series B Preferred
Stock and the Voting Preferred Stock called as hereinafter provided. Whenever
all arrearages dividends on the Series B Preferred Stock and the Voting
Preferred Stock then outstanding shall have been paid and dividends thereon for
the current quarterly dividend period shall have been paid or declared and set
apart for payment, then the right of the holders of the Series B Preferred
Stock and the Voting Preferred Stock to elect such additional two directors
shall cease (but subject always to the same provision for the vesting of such
voting rights in the case of any similar future arrearages in six quarterly
dividends), and the terms of office of all persons elected as directors by the
holders of the Series B Preferred Stock and the Voting Preferred Stock shall
forthwith terminate and the number of the Board of Directors shall be
automatically reduced accordingly. At any time after such voting power shall
have been so vested in the holders of shares of Series B Preferred Stock and
the Voting Preferred Stock, the secretary of the Company may, and upon the
written request of any holder of Series B Preferred Stock or any holder of
depositary receipts evidencing a fractional interest in the Series B Preferred
Stock (addressed to the secretary at the principal office of the Company)
shall, call a special meeting of the holders of the Series B Preferred Stock
and the Voting Preferred Stock for the election of the two directors to be
elected by them as herein provided, such call to be made by notice similar to
that
- 7 -
<PAGE> 68
provided in the Bylaws of the Company for a special meeting of the stockholders
or as required by law. If any such special meeting required to be called as
above provided shall not be called by the secretary within 20 days after
receipt of any such request, then any holder of shares of Series B Preferred
Stock (or depositary receipts representing shares of Series B Preferred Stock)
may call such meeting, upon the notice above provided, and for that purpose
shall have access to the stock books of the Company. The directors elected at
any such special meeting shall hold office until the next annual meeting of the
stockholders or special meeting held in lieu thereof if such office shall not
have previously terminated as above provided. If any vacancy shall occur among
the directors elected by the holders of the Series B Preferred Stock and the
Voting Preferred Stock, a successor shall be elected by the Board of Directors,
upon the nomination of the then-remaining director elected by the holders of
the Series B Preferred Stock and the Voting Preferred Stock or the successor of
such remaining director, to serve until the next annual meeting of the
stockholders or special meeting held in place thereof if such office shall not
have previously terminated as provided above.
(b) So long as any shares of Series B Preferred Stock are
outstanding, in addition to any other vote or consent of stockholders required
by law or by the Charter, as amended, the affirmative vote of at least 66 2/3%
of the votes entitled to be cast by the holders of the shares of Series B
Preferred Stock and the Voting Preferred Stock, at the time outstanding, acting
as a single class regardless of series, at any meeting called for the purpose,
shall be necessary for effecting or validating the following:
(i) Any amendment, alteration or repeal of any of the
provisions of these Articles Supplementary that materially adversely affects
the voting powers, rights or preferences of the holders of the Series B
Preferred Stock or the Voting Preferred Stock; PROVIDED, HOWEVER, that the
amendment of the provisions of the Charter so as to authorize or create, or to
increase the authorized amount, of any Junior Stock or any shares of any class
ranking on a parity with the Series B Preferred Stock or the Voting Preferred
Stock shall not be deemed to materially adversely affect the voting powers,
rights or preferences of the holders of Series B Preferred Stock, and PROVIDED,
FURTHER, that if any such amendment, alteration or repeal would materially
adversely affect any voting powers, rights of preferences of the Series B
Preferred Stock or another series of Voting Preferred Stock that are not
enjoyed by some or all of the other series which otherwise would be entitled to
vote in accordance herewith, the affirmative vote of least 66 2/3% of the votes
entitled to be cast by holders of all series similarly affected, similarly
given, shall be required in lieu of the affirmative vote of at least 66 2/3% of
the votes entitled to be cast by the holders of the shares of Series B
Preferred Stock and the Voting Preferred Stock which otherwise would be
entitled to vote in accordance herewith;
(ii) Enter into a share exchange that affects the Series B
Preferred Stock, consolidate with or merge into another entity, or permit
another entity to consolidate with or merge into the Company, unless in each
such case, each share of Series B Preferred Stock remains outstanding without a
material and adverse change to its terms and rights or is converted into or
exchanged for a share of preferred stock of the surviving entity having
preferences, rights, voting powers, restrictions, limitations as to
distributions, qualifications and terms and conditions of redemption identical
to those of a share of Series B Preferred Stock (except for changes that do not
materially and adversely affect the holders of the Series B Preferred Stock);
or
- 8 -
<PAGE> 69
(iii) The authorization, reclassification, or creation of,
or the increase in the authorized amount of, any shares of any class or any
security convertible into shares of any class ranking prior to the Series B
Preferred Stock in the distribution of assets on any liquidation, dissolution
or winding up of the Company or in the payment of dividends.
For purposes of the foregoing provisions of this Section 9, each share
of Series B Preferred Stock shall have one hundred (100) votes per share, each
of which 100 votes may be directed separately by the holder thereof (or by any
proxy or proxies of such holder). With respect to each share of the Series B
Preferred Stock, the holder thereof may designate up to 100 proxies, with each
proxy having the right to vote a whole number of votes (totaling 100 votes per
share of Series B Preferred Stock). Except as otherwise required by applicable
law or as set forth herein, the shares of Series B Preferred Stock shall not
have any relative, participating, optional or other special voting rights and
powers other than as set forth herein, and the consent of the holders thereof
shall not be required for the taking of any corporate action.
Section 10. RECORD HOLDERS. The Company and the Transfer Agent may
deem and treat the record holder of any shares of Series B Preferred Stock as
the true and lawful owner thereof for all purposes, and neither the Company nor
the Transfer Agent shall be affected by any notice to the contrary.
[Signatures On Following Page.]
- 9 -
<PAGE> 70
IN WITNESS WHEREOF, the Company has caused these Articles
Supplementary to be signed in its name and on its behalf on this 1st day of
May, 1998, by its Senior Vice President who acknowledges that these Articles
Supplementary are the act of the Company and that to the best of his knowledge,
information and belief and under penalties for perjury all matters and facts
contained in these Articles Supplementary are true in all material respects.
FELCOR SUITE HOTELS, INC.
By: /s/ Randall L. Churchey
----------------------------------
Randall L. Churchey,
Senior Vice President
Attest:
/s/ Lawrence D. Robinson
--------------------------------------
Lawrence D. Robinson, Secretary
(Corporate Seal)
- 10 -
<PAGE> 71
STATE OF MARYLAND
652537
STATE DEPARTMENT OF
ASSESSMENTS AND TAXATION
301 West Preston Street Baltimore, Maryland 21201
I, RITA WINSTON OF THE STATE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE
STATE OF MARYLAND, DO HEREBY CERTIFY THAT SAID DEPARTMENT, BY THE LAWS OF SAID
STATE, IS THE CUSTODIAN OF THE RECORDS OF THIS STATE RELATING TO THE FORFEITURE
OR SUSPENSION OF CORPORATE CHARTERS, OR OF CORPORATIONS TO TRANSACT BUSINESS IN
THIS STATE; AND I AM THE PROPER OFFICER TO EXECUTE THIS CERTIFICATE.
I FURTHER CERTIFY THAT FELCOR LODGING TRUST INCORPORATED IS A CORPORATION
DULY INCORPORATED AND EXISTING UNDER AND BY VIRTUE OF THE LAWS OF MARYLAND AND
SAID CORPORATION HAS FILED ALL ANNUAL REPORTS REQUIRED, HAS NO OUTSTANDING LATE
FILING PENALTIES ON THOSE REPORTS, AND HAS A RESIDENT AGENT. THEREFORE, THE
CORPORATION IS AT THE TIME OF THIS CERTIFICATE IN GOOD STANDING WITH THIS
DEPARTMENT AND DULY AUTHORIZED TO EXERCISE ALL THE POWERS RECITED IN ITS CHARTER
OR CERTIFICATE OF INCORPORATION, AND TO TRANSACT BUSINESS IN THE STATE OF
MARYLAND.
[SEAL] IN WITNESS WHEREOF, I HAVE HEREUNTO SET
MY HAND AND AFFIXED THE SEAL OF THE STATE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF
MARYLAND AT BALTIMORE THIS 27TH DAY OF
JULY, 1998.
/s/ RITA WINSTON
------------------------------
RITA WINSTON
AT5-031 CHARTER DIVISION
<PAGE> 72
STATE OF MARYLAND
657345
STATE DEPARTMENT OF
ASSESSMENTS AND TAXATION
301 West Preston Street Baltimore, Maryland 21201
DATE: JULY 27, 1998
THIS IS TO ADVISE YOU THAT THE ARTICLES OF MERGER WITH A NAME CHANGE FOR
FELCOR SUITE HOTELS, INC. (MD)-- SURVIVOR AND BRISTOL HOTEL COMPANY (DE)--
MERGING OUT CHANGING TO FELCOR LODGING TRUST INCORPORATED WERE RECEIVED AND
APPROVED FOR RECORD ON JULY 27, 1998 AT 11:22 AM.
FEE PAID: 101.00
IRENE B WOZNY
CHARTER SPECIALIST
[SEAL]
AT5-031
<PAGE> 73
STATE DEPARTMENT OF ASSESSMENTS
AND TAXATION
APPROVED FOR RECORD
7/27/98 at 11:22 a.m.
------- ----------
RECEIVED
'98 JUL 27 11:22
ARTICLES OF MERGER
BETWEEN
FELCOR SUITE HOTELS, INC.,
(a Maryland corporation)
AND
BRISTOL HOTEL COMPANY,
(a Delaware corporation)
These ARTICLES OF MERGER are made and entered into as of July 27, 1998, by
and between FelCor Suite Hotels, Inc., a Maryland corporation, and Bristol Hotel
Company, a Delaware corporation, each of which certifies as follows:
FIRST: Bristol Hotel Company (the "Merging Corporation") and FelCor Suite
Hotels, Inc. (the "Successor Corporation") agree to merge in accordance with the
terms and conditions set forth herein and in the Agreement and Plan of Merger,
dated March 23, 1998, by and between the Successor Corporation and the Merging
Corporation (the "Merger Agreement").
SECOND: The Merger will be effective at 9:00 a.m. Eastern time on July 28,
1998 (the "Effective Time", and the date on which the Effective Time occurs, the
"Effective Date").
THIRD: The name of the Merging Corporation is Bristol Hotel Company, which
is incorporated under the laws of the State of Delaware. The name of the
Successor Corporation is FelCor Suite Hotels, Inc., which is incorporated under
the laws of the State of Maryland. At the Effective Time, the name of the
Successor Corporation will be FelCor Lodging Trust Incorporated.
FOURTH: The Merging Corporation was incorporated under the General
Corporation Law of the State of Delaware on November 14, 1994. The Merging
Corporation is not registered or qualified to do business in the State of
Maryland.
FIFTH: The principal office in Maryland of the Successor Corporation is
located in Baltimore City at 11 East Chase Street, Baltimore, Maryland 21202.
The Merging Corporation does not have an office in the State of Maryland.
SIXTH: The Merging Corporation does not own any interest in land in the
State of Maryland, the title to which could be affected by recording an
instrument in the land records.
SEVENTH: (a) The total number of shares of stock of all classes that the
Merging Corporation has authority to issue is (i) 150,000,000 shares of common
stock, par value of $0.01 per share (each a "Merging Corporation Common Share"),
and (ii) 50,000,000 shares of preferred stock, par value of $0.01 per share
(each a "Merging Corporation Preferred Share"). The aggregate par value of all
shares of all classes of stock of the Merging Corporation is $2,000,000.
[STAMP]
<PAGE> 74
The total number of shares of stock of all classes that the Successor
Corporation has authority to issue is (i) 100,000,000 shares of common stock,
par value of $0.01 per share (each, a "Successor Corporation Common Share"), and
(ii) 10,000,000 shares of preferred stock, par value of $0.01 per share (each,
a "Successor Corporation Preferred Share"), 6,050,000 of which have been
designated as $1.95 Series A Cumulative Convertible Preferred Stock," par value
of $0.01 per share (each, a "Successor Corporation Series A Preferred Share")
and 57,000 of which have been designated as "9% Series B Cumulative Redeemable
Preferred Stock," par value of $0.01 per share (each, a "Successor Corporation
Series B Preferred Share"). The aggregate par value of all shares of all classes
of the Successor Corporation is $1,100,000.
(b) At the Effective Time, the charter of the Successor Corporation will be
amended such that the total number of shares of stock of all classes that the
Successor Corporation will have authority to issue will be (i) 200,000,000
Successor Corporation Common Shares, and (ii) 20,000,000 Successor Corporation
Preferred Shares, 6,050,000 of which will have been designated as Successor
Corporation Series A Preferred Shares and 57,000 of which will have been
designated as Successor Corporation Series B Preferred Shares. The aggregate par
value of all shares of all classes of the Successor Corporation will be
$2,200,000.
EIGHTH: The manner and basis of converting or exchanging outstanding stock
of the Merging Corporation into stock of the Successor Corporation or other
consideration and the treatment of any outstanding stock of the Successor
Corporation not to be converted or exchanged will be as follows:
(a) Subject to the provisions of clause (c) below, each Merging
Corporation Common Share outstanding immediately prior to the Effective
Time will be converted into the right to receive 0.685 (the "Exchange
Ratio") of a validly issued, fully paid and nonassessable Successor
Corporation Common Share, and each Merging Corporation Common Share
theretofore outstanding will cease to be outstanding and will cease to
exist, and each holder of a certificate representing such Merging
Corporation Common Shares will thereafter cease to have any rights with
respect to such shares, except the right to receive, without interest, the
number of Successor Corporation Common Shares as calculated pursuant to
this clause (a) and cash in lieu of fractional Successor Corporation Common
Shares in accordance with clause (c) below, upon the surrender of the stock
certificate for such Merging Corporation Common Shares;
(b) Each Successor Corporation Common Share, Successor Corporation
Series A Preferred Share and Successor Corporation Series B Preferred Share
outstanding immediately prior to the Effective Time will remain
outstanding;
(c) Notwithstanding any other provision hereof, no fractional
Successor Corporation Common Shares will be issued in connection with the
Merger. No such holder will be entitled to dividends, voting rights or any
other stockholder rights in respect of any fractional share. Instead, each
holder of outstanding Merging Corporation Common Shares having a fractional
interest arising upon the conversion or exchange of such shares in the
Merger will, at the time of surrender of its certificate representing
Merging Corporation Common Shares, be paid by the Successor Corporation an
amount in cash equal to the Closing Price immediately preceding the
Effective Time multiplied by the fraction of Successor Corporation Common
Shares to which such holder would
2
<PAGE> 75
otherwise be entitled. For purposes of this clause (c), "Closing Price"
means the closing price of the Successor Corporation Common Shares (as
reported in the New York Stock Exchange, Inc. Composite Tape) on the
business day immediately preceding the Effective Date; and
(d) Each Merging Corporation Common Share issued and held in the
Merging Corporation's treasury or by FelCor or any wholly owned subsidiary
of FelCor at the Effective Time, if any, will cease to be outstanding and
will be canceled and retired and will cease to exist without payment of any
consideration therefor.
NINTH: The terms and conditions of the transaction set forth in these
Articles of Merger were advised, authorized and approved by the Merging
Corporation in the manner and by the vote required by its certificate of
incorporation and bylaws and the laws of the State of Delaware. The terms and
conditions of the transaction set forth in these Articles of Merger, including
the Articles of Amendment attached hereto, were advised, authorized and approved
by the Successor Corporation in the manner and by the vote required by its
charter and bylaws and the laws of the State of Maryland. The manner of approval
by the Merging Corporation and the Successor Corporation of the transactions set
forth in these Articles of Merger was as follows:
(a) The Board of Directors of the Merging Corporation adopted a
resolution by unanimous vote on March 23, 1998, which declared that the
transaction set forth in these Articles of Merger is advisable and directed
that the Merger Agreement be submitted for adoption by the stockholders of
the Merging Corporation at an annual meeting of the stockholders of the
Merging Corporation held on July 27, 1998. Notice which stated that a
purpose of the annual meeting was to act on the Merger contemplated by
these Articles of Merger was given in the manner required by the applicable
provisions of the General Corporation Law of the State of Delaware to each
stockholder entitled to such notice. The Merger Agreement was adopted by
the stockholders of the Merging Corporation at the annual meeting of the
stockholders of the Merging Corporation held on July 27, 1998 by the
affirmative vote of a majority of all the votes entitled to be cast on the
matter in accordance with the certificate of incorporation of the Merging
Corporation and the General Corporation Law of the State of Delaware.
(b) The Board of Directors of the Successor Corporation adopted a
resolution by unanimous vote on March 23, 1998, which declared that the
transaction set forth in these Articles of Merger is advisable and directed
that the transaction be submitted for consideration by the stockholders of
the Successor Corporation at the annual meeting of the stockholders of the
Successor Corporation held on July 27, 1998. Notice which stated that a
purpose of the annual meeting was to act on the Merger contemplated by
these Articles of Merger, including the Articles of Amendment attached
hereto, was given in the manner required by the applicable provisions of
the Maryland General Corporation Law to each stockholder entitled to such
notice. The transaction set forth in these Articles of Merger, including
the Articles of Amendment attached hereto, was approved by the stockholders
of the Successor Corporation at the annual meeting of the stockholders of
the Successor Corporation held on July 27, 1998 by the affirmative vote of
a majority of all the votes entitled to be cast on the matter in accordance
with the charter of the Successor Corporation and the Maryland General
Corporation Law.
3
<PAGE> 76
TENTH: At the Effective Time, the Articles of Amendment and Restatement of
the Successor Corporation will be amended in the manner set forth in Exhibit A
hereto.
4
<PAGE> 77
IN WITNESS WHEREOF, the Merging Corporation and the Successor Corporation
have caused these Articles of Merger to be signed in their respective corporate
names and on their behalf by their respective President, Vice-President,
Chairman of the Board or Vice Chairman of the Board and attested to by their
respective Secretary or Assistant Secretary as of the 27th day of July, 1998.
ATTEST: FELCOR SUITE HOTELS, INC.,
a Maryland corporation
By: /s/ LAWRENCE D. ROBINSON By: /s/ RANDALL L. CHURCHEY
---------------------------- -----------------------------
Secretary Name: Randall L. Churchey
Title: Senior Vice President
BRISTOL HOTEL COMPANY,
a Delaware corporation
By: /s/ [ILLEGIBLE] By: /s/ JEFFREY P. MAYER
------------------------- ------------------------------
Assistant Secretary Name: Jeffrey P. Mayer
Title: Vice President
5
<PAGE> 78
The undersigned, being the duly elected and acting Senior Vice President of
FelCor Suite Hotels, Inc., a Maryland corporation, hereby acknowledges that the
foregoing Articles of Merger, of which this Certificate is a part, are the act
of FelCor Suite Hotels, Inc., a Maryland corporation, and certifies that, to the
best of his knowledge, information and belief and under penalties for perjury,
all matters and facts contained in these Articles of Merger relating to FelCor
Suite Hotels, Inc., a Maryland corporation, are true in all material respects.
/s/ RANDALL L. CHURCHEY
---------------------------------
Name: Randall L. Churchey
Senior Vice President
6
<PAGE> 79
The undersigned, being the duly elected and acting Vice President of
Bristol Hotel Company, a Delaware corporation, hereby acknowledges that the
foregoing Articles of Merger, of which this Certificate is a part, are the act
of Bristol Hotel Company, a Delaware corporation, and certifies that, to the
best of his knowledge, information and belief and under penalties for perjury,
all matters and facts contained in these Articles of Merger relating to Bristol
Hotel Company, a Delaware corporation, are true in all material respects.
/s/ JEFFREY P. MAYER
----------------------------------
Name: Jeffrey P. Mayer
Vice President
7
<PAGE> 80
EXHIBIT A
---------
ARTICLES OF AMENDMENT
TO
ARTICLES OF AMENDMENT AND RESTATEMENT
OF
FELCOR SUITE HOTELS, INC.
The undersigned, on behalf of FelCor Suite Hotels, Inc., a Maryland
corporation (the "Corporation"), hereby certifies as follows:
FIRST: The Corporation desires to amend its Charter as currently in effect.
SECOND: Article II of the Charter of the Corporation is hereby amended to
read in its entirety as follows:
"Article II.
Name.
The name of the Corporation is: FelCor Lodging Trust Incorporated."
THIRD: Paragraph A of Article V of the Charter of the Corporation is hereby
amended to read in its entirety as follows:
"A. Authorized Shares. The total number of shares of capital stock
that the Corporation shall have authority to issue is Two Hundred Twenty
Million (220,000,000) shares, consisting of Two Hundred Million
(200,000,000) shares of Common Stock, of the par value of One Cent ($0.01)
each, and Twenty Million (20,000,000) shares of Preferred Stock, of the par
value of One Cent ($0.01) each, amounting in aggregate par value to Two
Million Two Hundred Thousand Dollars ($2,200,000.00)."
<PAGE> 81
FOURTH: The total number of shares of stock that the Corporation had
authority to issue immediately prior to this amendment is One Hundred Ten
Million (110,000,000) shares, consisting of One Hundred Million (100,000,000)
shares of Common Stock, par value $.01 per share, and Ten Million Shares
(10,000,000) shares of Preferred Stock, par value $.01 per share, amounting in
aggregate par value to $1,100,000. The total number of shares of stock that the
Corporation has authority to issue immediately following this amendment is Two
Hundred and Twenty Million (220,000,000) shares, consisting of Two Hundred
Million (200,000,000) shares of Common Stock, par value $.01 per share, and
Twenty Million Shares (20,000,000) of Preferred Stock, par value $.01 per share,
amounting in aggregate par value to $2,200,000. The description of each class,
including the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption is not changed by this amendment.
FIFTH: The amendment of the Corporation's Charter set forth in these
Articles of Amendment was advised by the Board of Directors of the Corporation
and was approved by the stockholders of the Corporation.
<PAGE> 82
State of Maryland PARRIS N. GLENDENING
[SEAL] Governor
DEPARTMENT OF RONALD W. WINEHOLT
ASSESSMENTS AND TAXATION Director
PAUL B. ANDERSON
Charter Division Administrator
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
DOCUMENT CODE 11A BUSINESS CODE COUNTY
------------- --------- ----------
# P.A. Religious Close Stock Nonstock
----------- ---- ---- ---- ---- ----
Merging Bristol Hotel Surviving Felcor Suite
--------------- --------------------------------
Company Hotels, Inc.
- --------------------------- --------------------------------------------
(DE) D4126926
- --------------------------- --------------------------------------------
- --------------------------- --------------------------------------------
CODE AMOUNT FEE REMITTED
- ---- ------ ------------
10 59 Expedited Fee (New Name) Felcor Lodging
------ ----------------------------------
61 Rec. Fee (Arts. of Inc.) Trust Incorporated
------ --------------------------------------------
20 Organ. & Capitalization
------ --------------------------------------------
62 Rec. Fee (Amendment)
------
63 20 Rec. Fee (Merger, Consol.)
------
64 Rec. Fee (Transfer)
------
66 Rec. Fee (Revival) X Change of Name
------ -----
65 Rec. Fee (Dissolution) Change of Principal Office
------ -----
Special Fee Change of Resident Agent
------ -----
Certificate of Conveyance Change of Resident Agent
------ ----- Address
------------------------------
Resignation of Resident Agent
------------------------------ -----
Designation of Resident Agent
------------------------------ ----- and Resident Agent's Address
21 Recordation Tax
------ Change of Business Code
22 State Transfer Tax -----
------ ---------------------------------
23 Local Transfer Tax Adoption of Assumed Name
------ -----
70 Change of P.O., R.A. or R.A.A. ---------------------------------
------
31 6 1 Corp. Good Standing ---------------------------------
------ -------
600 Returns ---------------------------------
- -----------------------------------------------------------
52 Foreign Qualification
------
NA Foreign Registration Other Change(s)
------ ----- ------------------
51 Foreign Name Registration
------ ---------------------------------
53 Foreign Resolution
------ ---------------------------------
54 For. Supplement Cert.
------
56 Penalty CODE 045
------ ----------------------
50 Cert. of Qual. or Reg.
- -----------------------------------------------------------
83 Cert. Limited Partnership ATTENTION: /S/ DAVID GIBBONS
------ --------------------------
84 Amendment to Limited Partnership
------ ------------------------------------
85 Termination of Limited Partnership
------ ------------------------------------
80 For. Limited Partnership
------
91 Amend/Cancellation, For. Limited Part.
------
87 Limited Part. Good Standing
- -----------------------------------------------------------
67 Cert. Limited Liability Partnership
------
68 LLP Amendment - Domestic MAIL TO ADDRESS:
------
Foreign Limited Liability Partnership --------------------
------
LLP Amendment - Foreign ------------------------------------
- -----------------------------------------------------------
99 Art. of Organization (LLC) ------------------------------------
------
98 LLC Amendment, Diss, Continuation ------------------------------------
------
97 LLC Cancellation. ------------------------------------
------
96 Registration Foreign LLC
------
94 Foreign LLC Supplemental
------
92 LLC Good Standing (short)
- -----------------------------------------------------------
13 16 1 Certified Copy 10
------ ------------- ----------------
Other
- -- ------ ---------------------------------------
TOTAL NOTE:
FEES 101 Credit Card ----
---------- ----- Effective: 7/28/98 9:00am
Eastern Time
X Check Cash
----- -----
Documents on checks
- -------------------- -------
APPROVED BY:
--------------
Room 809 - 301 West Preston Street - Baltimore, Maryland 21201
Phone: (410) 767-1350 - Fax (410) 333-7097 - TTY users call Maryland Relay 1-800-738-2258
Toll Free in MD: 1-888-246-5941 - web site: http://www.dat.state.md.us
</TABLE>
<PAGE> 83
IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment
to be executed in its name and on its behalf on the 27th day of July, 1998, by
Randall L. Churchey, its Senior Vice President and Chief Financial Officer, who
acknowledges that these Articles of Amendment are the act of the Corporation and
certifies that, to the best of his knowledge, information and belief and under
penalties for perjury, all matters and facts contained in these Articles of
Amendment are true in all material respects.
ATTEST: FELCOR SUITE HOTELS, INC.
/s/ LAWRENCE D. ROBINSON By: /s/ RANDALL L. CHURCHEY (SEAL)
- ----------------------------- -------------------------------------
Lawrence D. Robinson Randall L. Churchey
Secretary Senior Vice President and Chief
Financial Officer
<PAGE> 1
EXHIBIT 10.14
U.S. $1,100,000,000
FOURTH AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of July 1, 1998
Among
FELCOR SUITE HOTELS, INC.
and FELCOR SUITES LIMITED PARTNERSHIP
as Borrower
-- --------
and
THE LENDERS PARTY HERETO
and
THE CHASE MANHATTAN BANK
as Administrative Agent
-- -------------- -----
CHASE SECURITIES INC.
as Arranger
BANKERS TRUST COMPANY
NATIONSBANK, N.A.
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Co-Arrangers & Documentation Agents
--------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
ARTICLE I
<S> <C> <C>
DEFINITIONS AND ACCOUNTING TERMS.................................................................................. 2
1.1. Defined Terms................................................................................. 2
1.2. Computation of Time Periods................................................................... 37
1.3. Accounting Terms.............................................................................. 37
1.4. Certain Terms................................................................................. 37
ARTICLE II
AMOUNTS AND TERMS OF THE LOANS AND LETTERS OF CREDIT.............................................................. 38
2.1. The Revolving Credit Loans.................................................................... 38
2.2. The Term Loans................................................................................ 38
2.3. Making the Loans.............................................................................. 38
2.4. Fees.......................................................................................... 41
2.5. Reduction and Termination of the Commitments.................................................. 42
2.6. Repayment..................................................................................... 42
2.7. Prepayments................................................................................... 42
2.8. Conversion/Continuation Option................................................................ 44
2.9. Interest...................................................................................... 45
2.10. Interest Rate Determination and Protection.................................................... 45
2.11. Increased Costs............................................................................... 46
2.12. Illegality.................................................................................... 47
2.13. Capital Adequacy.............................................................................. 47
2.14. Payments and Computations..................................................................... 47
2.15. Taxes......................................................................................... 50
2.16. Sharing of Payments, Etc...................................................................... 52
2.17. Swing Advances................................................................................ 52
2.18. Letter of Credit.............................................................................. 54
2.19 Letter of Credit Requests..................................................................... 55
2.20 Letter of Credit Participations............................................................... 56
2.21 Agreement to Repay Letter of Credit Drawings.................................................. 58
</TABLE>
i
<PAGE> 3
<TABLE>
ARTICLE III
<S> <C> <C>
CONDITIONS TO EFFECTIVENESS OF THIS AGREEMENT AND OF LENDING
AND OF ISSUANCE OF LETTERS OF CREDIT.............................................................................. 59
3.1. Conditions Precedent to Effectiveness of this
Agreement, to Initial Loans and Letters of Credit............................................. 59
3.2. Additional Conditions Precedent to Effectiveness
of this Agreement, to Initial Loans and Letters
of Credit..................................................................................... 61
3.3. Conditions Precedent to Each Loan and
Letter of Credit.............................................................................. 62
ARTICLE IV
REPRESENTATIONS AND WARRANTIES.................................................................................... 63
4.1. Existence; Compliance with Law................................................................ 63
4.2. Power; Authorization; Enforceable Obligations................................................. 63
4.3. Taxes......................................................................................... 65
4.4. Full Disclosure............................................................................... 65
4.5. Financial Matters............................................................................. 65
4.6. Litigation.................................................................................... 66
4.7. Margin Regulations............................................................................ 66
4.8. Ownership of Borrower and DJONT; Subsidiaries................................................. 67
4.9. ERISA......................................................................................... 68
4.10. Indebtedness.................................................................................. 68
4.11. Restricted Payments........................................................................... 69
4.12. No Burdensome Restrictions; No Defaults....................................................... 69
4.13. Investments. ................................................................................. 69
4.14. Government Regulation......................................................................... 69
4.15. Insurance..................................................................................... 70
4.16. Labor Matters................................................................................. 70
4.17. Force Majeure................................................................................. 71
4.18. Use of Proceeds............................................................................... 71
4.19. Environmental Protection...................................................................... 71
4.20. Contractual Obligations Concerning Assets..................................................... 73
4.21. Intellectual Property......................................................................... 73
4.22. Title......................................................................................... 74
4.23. Status as REIT................................................................................ 76
4.24. Operator: Compliance with Law................................................................. 76
4.25. Operating Leases, Licenses and Management Agreement........................................... 76
4.26. FF&E Reserves................................................................................. 77
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE V
FINANCIAL COVENANTS............................................................................................... 77
5.1. Unsecured Interest Expense Coverage........................................................... 78
5.2. Fixed Charge Coverage Ratio................................................................... 78
5.3. Maintenance of Tangible Net Worth............................................................. 78
5.4. Limitations on Total Indebtedness............................................................. 78
5.5. Limitations on Total Secured Indebtedness..................................................... 78
5.6. Adjusted NOI and Hotels....................................................................... 78
5.7. Limitations on Recourse Secured Indebtedness.................................................. 79
ARTICLE VI
AFFIRMATIVE COVENANTS............................................................................................. 79
6.1. Compliance with Laws, Etc..................................................................... 79
6.2. Conduct of Business........................................................................... 79
6.3. Payment of Taxes, Etc......................................................................... 80
6.4. Maintenance of Insurance...................................................................... 80
6.5. Preservation of Existence, Etc................................................................ 80
6.6. Access........................................................................................ 80
6.7. Keeping of Books.............................................................................. 81
6.8. Maintenance of Properties, Etc................................................................ 81
6.9. Performance and Compliance with Other Covenants............................................... 81
6.10. Application of Proceeds....................................................................... 81
6.11. Financial Statements.......................................................................... 81
6.12. Reporting Requirements........................................................................ 83
6.13. Leases and Operating Leases; Management Agreements
and Licenses.................................................................................. 86
6.14. Intentionally Omitted......................................................................... 87
6.15. Employee Plans................................................................................ 87
6.16. Intentionally Omitted......................................................................... 87
6.17. Fiscal Year................................................................................... 87
6.18. Environmental Matters......................................................................... 87
6.19. REIT Requirements............................................................................. 88
6.20. Maintenance of FF&E Reserves.................................................................. 88
6.21. INTENTIONALLY DELETED......................................................................... 88
6.22. Further Assurances............................................................................ 88
6.23. Unencumbered Hotel Properties/Financial Covenant Imbalance.................................... 88
6.24. Hotel Documents............................................................................... 89
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
ARTICLE VII
<S> <C> <C>
NEGATIVE COVENANTS................................................................................................ 89
7.1. Restrictions on Creation of Subsidiaries...................................................... 89
7.2. Operation/Ownership of Hotels................................................................. 89
7.3. Lease Obligations............................................................................. 89
7.4. Restricted Payments........................................................................... 90
7.5. Mergers, Stock Issuances, Asset Sales, Etc.................................................... 90
7.6. Restrictions on Construction/Budget Hotels.................................................... 91
7.7. Change in Nature of Business or in Capital Structure.......................................... 91
7.8. Modification of Material Agreements........................................................... 92
7.9. Accounting Changes............................................................................ 92
7.10. Transactions with Affiliates.................................................................. 92
7.11. Adverse or Speculative Transactions........................................................... 92
7.12. Environmental Matters......................................................................... 92
7.13. Joint Enterprises............................................................................. 93
7.14. Intentionally Omitted......................................................................... 93
7.15. ERISA Plan Assets............................................................................. 93
ARTICLE VIII
EVENTS OF DEFAULT................................................................................................. 94
8.1. Events of Default............................................................................. 94
8.2. Remedies...................................................................................... 96
ARTICLE IX
THE ADMINISTRATIVE AGENT.......................................................................................... 97
9.1. Authorization and Action...................................................................... 97
9.2. Administrative Agent's Reliance, Etc.......................................................... 98
9.3. Chase and Affiliates.......................................................................... 99
9.4. Lender Credit Decision........................................................................ 99
9.5. Indemnification............................................................................... 99
9.6. Successor Agent...............................................................................100
</TABLE>
iv
<PAGE> 6
<TABLE>
ARTICLE X
<S> <C> <C>
MISCELLANEOUS.....................................................................................................101
10.1. Amendments, Etc...............................................................................101
10.2. Notices, Etc..................................................................................102
10.3. No Waiver; Remedies...........................................................................103
10.4. Costs; Expenses; Indemnities..................................................................103
10.5. Right of Set-off..............................................................................105
10.6. Binding Effect................................................................................105
10.7. Assignments and Participations................................................................105
10.8. Governing Law; Severability...................................................................109
10.9. Submission to Jurisdiction; Service of Process................................................109
10.10. Section Titles................................................................................109
10.11. Execution in Counterparts.....................................................................110
10.12. Entire Agreement..............................................................................110
10.13. Confidentiality...............................................................................110
10.14. WAIVER OF JURY TRIAL..........................................................................110
10.15. Joint and Several Obligations.................................................................110
</TABLE>
v
<PAGE> 7
SCHEDULES
Schedule I - Commitments
Schedule II - Applicable Lending Offices and Addresses for Notices
Schedule III - Operating Lessees
Schedule IV - Permitted Transferees
Schedule 4.8 - Subsidiaries and Unconsolidated Entities
Schedule 4.10 - Existing Indebtedness
Schedule 4.13 - Existing Investments
Schedule 4.19 - Environmental Protection
Schedule 4.22(a) - Owned Real Estate
Schedule 4.22(b) - Leased Real Estate
vi
<PAGE> 8
EXHIBITS
Exhibit A-1 - Form of Revolving Credit Note
Exhibit A-2 - Form of Term Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Notice of Conversion or Continuation
Exhibit D - Form(s) of Opinion(s) of Counsel for the Loan Parties
Exhibit E - Form of Assignment and Acceptance
Exhibit F - Intentionally Deleted
Exhibit G - Form of Compliance Certificate
Exhibit H - Form of Operating Lease
Exhibit I - Form of Subsidiary Guaranty
Exhibit J - INTENTIONALLY DELETED
Exhibit K - Form of Letter of Credit Request
vii
<PAGE> 9
FOURTH AMENDED AND RESTATED CREDIT AGREEMENT, dated as of July 1, 1998,
among FELCOR SUITE HOTELS, INC., a Maryland corporation ("FelCor") and FELCOR
SUITES LIMITED PARTNERSHIP, a Delaware limited partnership ("FelCor LP" and
collectively with FelCor, the "Borrower"), the financial institutions listed on
the signature pages hereof (each individually a "Lender" and collectively the
"Lenders") and THE CHASE MANHATTAN BANK ("Chase"), as administrative agent for
the Lenders (in such capacity, the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Revolving Credit Agreement dated as
of September 30, 1996, among the Borrower, the financial institutions listed on
the signature page thereof, the Administrative Agent and Wells Fargo Bank,
National Association ("Wells Fargo") as documentation agent (the "Original
Revolving Credit Agreement"), the Original Lenders agreed to make to the
Borrower revolving credit advances of up to $250,000,000 (the "Previous Maximum
Revolving Credit Amount") in aggregate principal amount outstanding at any one
time, for the purposes and upon the terms and subject to the conditions set
forth therein;
WHEREAS, pursuant to that certain Amended and Restated Revolving Credit
Agreement dated as of October 18, 1996, among the Borrower, the Lenders, the
Administrative Agent and Wells Fargo as documentation agent (the "Amended
Revolving Credit Agreement") the terms and provisions of the Original Revolving
Credit Agreement were amended and restated as more particularly set forth
therein;
WHEREAS, pursuant to that certain Second Amended and Restated Revolving
Credit Agreement dated as of March 10, 1997, among the Borrower, the Lenders,
the Administrative Agent and Wells Fargo as documentation agent (the "Second
Amended Revolving Credit Agreement") the terms and provisions of the Amended
Revolving Credit Agreement were amended and restated as more particularly set
forth therein;
WHEREAS, pursuant to that certain Third Amended and Restated Revolving
Credit Agreement dated as of August 14, 1997, among the Borrower, the Lenders,
the Administrative Agent and Wells Fargo as documentation agent (the "Third
Amended Revolving Credit Agreement") the terms and provisions of the
1
<PAGE> 10
Second Amended Revolving Credit Agreement were amended and restated as more
particularly set forth therein;
WHEREAS, as of the date hereof, Revolving Credit Loans (hereinafter
defined) in the aggregate principal amount of $453,000,000.00 have been advanced
to the Borrower pursuant to the terms of the Third Amended Revolving Credit
Agreement; and
WHEREAS, the Borrower has requested, and the Lenders have agreed, to
(x) increase the Previous Maximum Revolving Credit Amount, (y) make the Term
Loans and (z) amend certain terms and provisions of the Third Amended Revolving
Credit Agreement and to restate the same as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the parties hereto hereby agree that the
aforementioned recitals are true and correct and hereby incorporated herein and
that the Third Amended Revolving Credit Agreement is hereby amended and restated
in its entirety so that all of the terms and conditions contained in this
Agreement shall supersede and control the terms and conditions of the Third
Amended Revolving Credit Agreement.
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1. Defined Terms. As used in this Agreement, the following terms have
the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
"Adjusted EBITDA" means, for any Person for any period, EBITDA of such
Person for such period less the FF&E Reserve for such Person.
"Adjusted Funds From Operations" means, for any Person, for any period,
Net Income (Loss) of such Person for such period plus (a) the sum of the
following amounts of such Person and its Subsidiaries for such period determined
on a consolidated basis in conformity with GAAP to the extent included in the
determination of such Net Income (Loss): (i) depreciation expense, (ii)
amortization expense and other non-cash charges of such Person and its
Subsidiaries with respect to their real estate assets for such period, (iii)
losses from Asset Sales of such Person and its Subsidiaries, losses resulting
from restructuring of Indebtedness of such Person
2
<PAGE> 11
and its Subsidiaries and other extraordinary losses, and (iv) minority interests
attributable to FelCor LP's partnership units; less (b) the sum of the following
amounts of such Person and its Subsidiaries for such period determined on a
consolidated basis in conformity with GAAP to the extent included in the
determination of such Net Income (Loss): (i) gains from Asset Sales of such
Person and its Subsidiaries, gains resulting from restructuring of Indebtedness
of such Person and its Subsidiaries and other extraordinary gains, and (ii) the
applicable share of Net Income (Loss) of such Person's Unconsolidated Entities;
plus (c) such Person's Pro Rata Share of Adjusted Funds From Operations of such
Person's Unconsolidated Entities.
"Adjusted NOI" means, with respect to any Hotel owned or leased by the
Borrower or any of its Subsidiaries, Eligible Joint Ventures or Unconsolidated
Entities, for any period, the Net Operating Income for such Hotel for such
period less the FF&E Reserve for such Hotel for such period.
"Affiliate" means, to any Person, any Subsidiary of such Person and any
other Person which, directly or indirectly, controls, is controlled by or is
under common control with such Person and includes each executive officer,
director, trustee, limited liability company manager or general partner of such
Person, and each Person who is the beneficial owner of 10% or more of any class
of voting Stock of such Person. For the purposes of this definition, "control"
means the possession of the power to direct or cause the direction of management
and policies of such Person, whether through the ownership of voting securities,
by contract or otherwise.
"Agreement" means the Third Amended Revolving Credit Agreement,
together with all Exhibits and Schedules thereto, as amended and restated by
this Fourth Amended and Restated Credit Agreement, together with all Exhibits
and Schedules hereto and as the same may be further amended, supplemented or
otherwise modified from time to time.
"Allerton Hotel" shall mean that certain Hotel located in Chicago
Illinois and commonly known as the Allerton Hotel.
"Alternative Currency Contract" means a currency swap agreement,
currency cap agreement, currency collar agreement or forward currency agreement
entered into to provide protection against fluctuations in an Alternative
Currency.
3
<PAGE> 12
"Alternative Currency" means any lawful currency of a country where a
Hotel is located, other than Dollars, which is freely transferable and
convertible into Dollars.
"Applicable Lending Office" means, with respect to each Lender, its
Domestic Lending Office in the case of a Base Rate Loan and its Eurodollar
Lending Office in the case of a Eurodollar Rate Loan.
"Applicable Margin" means, with respect to each Loan, the applicable
percentage per annum set forth below based upon (i) with respect to Level I
through IV Status, the Status then in effect and (ii) with respect to Level V
through VIII Status, the Status in effect on the most recent Applicable Margin
Reset Date, it being understood that the Applicable Margin for (i) Base Rate
Loans shall be the percentage set forth under the column "Base Rate Loans", (ii)
Eurodollar Rate Loans shall be the percentage set forth under the column
"Eurodollar Rate Loans", and (iii) the Commitment Fee shall be the percentage
set forth under the column "Commitment Fee":
<TABLE>
<CAPTION>
Base Rate Eurodollar Rate Commitment
Loans Loans Fee
--------- ----------- -----------
<S> <C> <C> <C>
Level I Status 0% .875% 0.125%
Level II Status 0% 1.00% 0.15%
Level III Status 0% 1.125% 0.15%
Level IV Status 0% 1.25% 0.20%
Level V Status 0% 1.375% 0.20%
Level VI Status 0% 1.5% 0.20%
Level VII Status 0.125% 1.625% 0.25%
Level VIII 0.25% 1.75% 0.30%
</TABLE>
"Applicable Margin Reset Date" shall mean the 45th day following the
end of the most recent Fiscal Quarter.
"Asset Sale" means any sale, conveyance, transfer, assignment, lease or
other disposition (including, without limitation, by merger or consolidation,
and by condemnation, eminent domain, loss, damage, or destruction, and whether
by operation of law or otherwise) by the Borrower or any of its Subsidiaries to
any
4
<PAGE> 13
Person (other than to Borrower or any of its Subsidiaries) of any Stock of any
of its Subsidiaries, any Stock Equivalents of any of its Subsidiaries or any
Hotel, but excluding Operating Leases.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an Eligible Assignee, and accepted by the Administrative
Agent, in substantially the form of Exhibit E.
"Available Credit" means, at any time, an amount equal to the then
effective Revolving Credit Commitments of the Lenders less the sum of (x) the
aggregate of the outstanding principal amount of the Revolving Credit Loans at
such time and (y) the Letter of Credit Outstandings.
"Base Rate" means, for any period, a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per annum shall be
equal at all times to the higher of:
(a) the rate of interest announced publicly by Chase at its principal
office, from time to time, as Chase's base rate; and
(b) the sum (adjusted to the nearest 1/8 of one percent or, if there is no
nearest 1/8 of one percent, to the next higher 1/8 of one percent) of (i) 1/2 of
one percent per annum plus (ii) the Federal Funds Rate.
"Base Rate Loan" means any outstanding principal amount of the Loans of
any Lender that bears interest with reference to the Base Rate, other than Swing
Advances.
"Borrower's Investment" means, with respect to any Hotel, the
Borrower's or any of its Subsidiaries' investment in such Hotel (including all
investments constituting, evidencing or secured by an interest in property,
whether tangible or intangible and whether real, personal or mixed, that is used
or intended for use in, or in any manner connected with or relating to, the
ownership or leasing of such Hotel, specifically including, without limitation,
investments in Subsidiaries and Unconsolidated Entities owning or leasing
Hotels), at cost, on a consolidated basis, provided that in determining the cost
of such investments, there shall be included (i) the amount of all cash paid and
the value (as determined by the Board of Directors of FelCor for purposes of
such investment) of any other property transferred therefor by the Borrower or
its Subsidiary, (ii) the amount of all indebtedness and other obligations
assumed or incurred by the Borrower or its
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<PAGE> 14
Subsidiary or to which the Borrower or its Subsidiary takes subject, and (iii)
the value (as determined by the Board of Directors of FelCor for the purposes of
such investment) of all equity securities of which the issuer is an entity that
is, or upon such investment will be, included within the Borrower or its
Subsidiary and which are issued (otherwise than for cash) to, or retained by,
any person other than the Borrower or its Subsidiary in connection with such
investment. For purposes of this definition only "indebtedness" of the Borrower
or its Subsidiary shall mean the consolidated liabilities of the Borrower and
its Subsidiaries for borrowed money (including all notes payable and drafts
accepted representing extensions of credit) and all obligations evidenced by
bonds, debentures, notes or other similar instruments on which interest charges
are customarily paid, including obligations under Capitalized Leases.
"Borrowing" means a borrowing consisting of Loans made on the same day
by the Lenders ratably according to their respective Commitments.
"Bristol" shall mean Bristol Hotel Company, a Delaware corporation.
"Bristol Distribution" shall mean Borrower's one time earnings and
profits dividend associated with the Bristol Merger.
"Bristol Effective Date" shall be the date on which the Bristol Merger
occurs, provided, however, if the Bristol Merger occurs after August 15, 1998
the Bristol Effective Date shall be deemed not to have occurred.
"Bristol Merger" shall mean the merger between Borrower and Bristol,
provided, such merger is consummated on terms substantially similar to those set
forth in that certain Merger Agreement dated as of March 23, 1998, as in effect
on the date hereof.
"Bristol Merger Date" shall be the date on which the Bristol Merger is
duly consummated.
"Business Day" means a day of the year on which banks are not required
or authorized to close in New York City and California and, if the applicable
Business Day relates to a Eurodollar Rate Loan, a day on which dealings are also
carried on in the London interbank market.
"Capital Expenditures" means, for any Person for any period, the
aggregate of all expenditures by such Person and its Subsidiaries, except
interest
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<PAGE> 15
capitalized during construction, during such period for property, plant or
equipment, including, without limitation, renewals, improvements, replacements
and capitalized repairs, that would be reflected as additions to property, plant
or equipment on a consolidated balance sheet of such Person and its Subsidiaries
prepared in conformity with GAAP. For the purpose of this definition, the
purchase price of equipment which is acquired simultaneously with the trade-in
of existing equipment owned by such Person or any of its Subsidiaries or with
insurance proceeds shall be included in Capital Expenditures only to the extent
of the gross amount of such purchase price less the credit granted by the seller
of such equipment being traded in at such time or the amount of such proceeds,
as the case may be.
"Capitalized Lease" means, as to any Person, any lease of property by
such Person as lessee which would be capitalized on a balance sheet of such
Person prepared in conformity with GAAP.
"Capitalized Lease Obligations" means, as to any Person, the
capitalized amount of all obligations of such Person or any of its Subsidiaries
under Capitalized Leases, as determined on a consolidated basis in conformity
with GAAP.
"Cash" shall mean coin or currency of the United States of America or
immediately available federal funds.
"Cash Equivalents" means (i) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or insured by the
United States government or any agency thereof, (ii) certificates of deposit,
eurodollar time deposits, overnight bank deposits and bankers' acceptances of
any commercial bank organized under the laws of the United States, or any State
thereof, and having total assets in excess of $5,000,000,000 having maturities
of one year or less from the date of acquisition, and (iii) commercial paper of
an issuer rated at least "A-1" by S&P or "P-1" by Moody's, or carrying an
equivalent rating by a nationally recognized rating agency if both of the two
named rating agencies cease publishing ratings of investments.
"Closing Date" means July 1, 1998.
"Code" means the Internal Revenue Code of 1986 (or any successor
legislation thereto), as amended from time to time.
"Commitment" means, as to any Lender, such Lender's Revolving Credit
Commitment and/or Term Loan Commitment and "Commitments" means the
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<PAGE> 16
aggregate Revolving Credit Commitments and Term Loan Commitments of all Lenders.
"Commitment Fee" has the meaning specified in Section 2.4(a).
"Compliance Certificate" shall have the meaning set forth in Section
3.1(j) hereof.
"Contingent Obligation" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of such Person with respect to any
Indebtedness or Contractual Obligation of another Person, if the purpose or
intent of such Person in incurring the Contingent Obligation is to provide
assurance to the obligee of such Indebtedness or Contractual Obligation that
such Indebtedness or Contractual Obligation will be paid or discharged, or that
any agreement relating thereto will be complied with, or that any holder of such
Indebtedness or Contractual Obligation will be protected (in whole or in part)
against loss in respect thereof. Contingent Obligations of a Person include,
without limitation, (a) the direct or indirect guarantee, endorsement (other
than for collection or deposit in the ordinary course of business), co-making,
discounting with recourse or sale with recourse by such Person of an obligation
of another Person (including, in the case of any Guarantor, its obligations
under its Subsidiary Guaranty), and (b) any liability of such Person for an
obligation of another Person through any agreement (contingent or otherwise) (i)
to purchase, repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of such obligation
(whether in the form of a loan, advance, stock purchase, capital contribution or
otherwise), (ii) to maintain the solvency or any balance sheet item, level of
income or financial condition of another Person, (iii) to make take-or-pay or
similar payments, if required, regardless of non-performance by any other party
or parties to an agreement, (iv) to purchase, sell or lease (as lessor or
lessee) property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such obligation or to assure the holder
of such obligation against loss, or (v) to supply funds to or in any other
manner invest in such other Person (including, without limitation, to pay for
property or services irrespective of whether such property is received or such
services are rendered), if in the case of any agreement described under
subclause (i), (ii), (iii), (iv) or (v) of this sentence the primary purpose or
intent thereof is as described in the preceding sentence. Anything herein to the
contrary notwithstanding, no agreement entered into by the Borrower or any of
its Subsidiaries or Unconsolidated Entities with respect to its acquisition of
any direct or indirect interest in any Hotel shall, prior to the satisfaction in
full of all conditions precedent to the obligations of such Person pursuant to
the agreement, be deemed or construed
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<PAGE> 17
to constitute a "Contingent Obligation" or "Indebtedness" of such Person
hereunder, provided that pursuant to any such agreement, the Borrower or its
Subsidiary or Unconsolidated Entity is not liable or responsible for, and does
not assume any, development or construction risks. The amount of any Contingent
Obligation shall be equal to the amount of the obligation so guaranteed or
otherwise supported.
"Contractual Obligation" of any Person means any obligation, agreement,
undertaking or similar provision of any security issued by such Person or of any
agreement (including, without limitation, any management or franchise
agreement), undertaking, contract, lease, indenture, mortgage, deed of trust or
other instrument (excluding a Loan Document) to which such Person is a party or
by which it or any of its property is bound or to which any of its properties is
subject.
"Default" means any event which with the passing of time or the giving
of notice or both would become an Event of Default.
"DJONT" means DJONT Operations, L.L.C., a Delaware limited liability
company.
"DOL" means the United States Department of Labor, or any successor
thereto.
"Dollars" and the sign "$" each mean the lawful money of the United
States of America.
"Domestic Lending Office" means, with respect to any Lender, the office
of such Lender specified as its "Domestic Lending Office" opposite its name on
Schedule II or such other office of such Lender as such Lender may from time to
time specify to the Borrower and the Administrative Agent.
"Drawing" shall have the meaning provided in Section 2.21(a).
"EBITDA" means, for any Person for any period, the Net Income (Loss) of
such Person for such period taken as a single accounting period, plus (a) the
sum of the following amounts of such Person and its Subsidiaries for such period
determined on a consolidated basis in conformity with GAAP to the extent
included in the determination of such Net Income (Loss): (i) depreciation
expense, (ii) amortization expense and other non-cash charges, (iii) interest
expense, (iv) income tax expense, (v) extraordinary losses (and other losses on
Asset Sales not otherwise included in extraordinary losses determined on a
consolidated basis in
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<PAGE> 18
conformity with GAAP), and (vi) minority interests attributable to FelCor LP's
partnership units, less (b) the sum of the following amounts of such Person and
its Subsidiaries determined on a consolidated basis in conformity with GAAP to
the extent included in the determination of such Net Income (Loss): (i)
extraordinary gains (and in the case of the Borrower, other gains on Asset Sales
not otherwise included in extraordinary gains determined on a consolidated basis
in conformity with GAAP), (ii) the applicable share of Net Income (Loss) of such
Person's Unconsolidated Entities, (iii) cash payments made with respect to any
non-cash charge which was added back to Net Operating Income to determine EBITDA
for any prior period; plus (c) such Person's Pro Rata Share of EBITDA of such
Person's Unconsolidated Entities.
"Effective Date" has the meaning specified in Section 3.1.
"Eligible Assignee" means (i) a commercial bank organized under the
laws of the United States, or any State thereof, and having total assets in
excess of $5,000,000,000; (ii) a commercial bank organized under the laws of any
other country which is a member of the OECD, or a political subdivision of any
such country, and having total assets in excess of $5,000,000,000, provided that
such bank is acting through a branch or agency located in the country in which
it is organized or another country which is also a member of the OECD or the
Cayman Islands; (iii) the central bank of any country which is a member of the
OECD; corporation organized under the laws of the United States, or any State
thereof, and having total assets in excess of $3,000,000,000; (iv) a mutual fund
or an insurance company organized under the laws of the United States, or any
State thereof, in each case having total assets in excess of $5,000,000,000; (v)
any Lender; (vi) any Affiliate of any Lender; (vii) any Person other than an
Affiliate of a Loan Party; and (viii) only with respect to any Lender that is a
fund that invests in bank loans, any other fund or trust entity that invests in
bank loans and is advised by or managed by the same investment advisor as such
Lender or by an Affiliate of such investment advisor, in each case ((i) through
(viii) above) acceptable (a) to the Administrative Agent, and (b) provided no
Default or Event of Default exists, to the Borrower, which acceptance will not
be unreasonably withheld, conditioned or delayed.
"Eligible Entity" shall mean any Eligible Joint Venture in which the
Borrower owns, directly or indirectly, at least a 90% equity interest and the
remainder of such equity interest is owned by either (i) Promus, (ii) Sheraton
or (iii) New Bristol, provided, however, such Eligible Joint Venture shall only
be an Eligible Entity if (i) Borrower (x) is the sole general partner (or
equivalent) in such Eligible Joint Venture or (y) owns directly or indirectly at
least 90% of the Stock of the sole
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<PAGE> 19
general partner (or equivalent) in such Eligible Joint Venture and all other
Stock of such sole general partner (or equivalent) which is not owned by
Borrower is owned by either Promus, Sheraton or New Bristol, (ii) such sole
general partner (or equivalent) is the only Person who can unilaterally
authorize the sale or encumbrance of the assets of such Eligible Joint Venture
(iii) Borrower alone controls the sole general partner (or equivalent) and (iv)
such Eligible Joint Venture has no debt other than unsecured trade debt incurred
in the ordinary course of business. For the purposes of this definition,
"control" means the possession of the power to direct or cause the direction of
management and policies of such Person (including without limitation the power
to authorize the sale or encumbrance of the assets of such Person), whether
through the ownership of voting securities, by contract or otherwise.
"Eligible Joint Venture" means any joint venture, corporation,
partnership or other business entity in which the Borrower (i) owns directly or
indirectly a JV% of at least 50% and (ii) is (or owns directly or indirectly a
majority of the voting Stock of and controls) the managing general partner or
equivalent thereof for such entity and (iii) Borrower alone controls such
managing general partner or equivalent. For the purposes of this definition,
"control" means the possession of the power to direct or cause the direction of
management and policies of such Person (including without limitation the power
to authorize the sale or encumbrance of the assets of such Person), whether
through the ownership of voting securities, by contract or otherwise.
"Environmental Claim" means any accusation, allegation, notice of
violation, action, claim, Environmental Lien, demand, abatement or other Order
or direction (conditional or otherwise) by any Governmental Authority or any
other Person for personal injury (including sickness, disease or death),
tangible or intangible property damage, damage to the environment, nuisance,
pollution, contamination or other adverse effects on the environment, or for
fines, penalties or restriction, resulting from or based upon (i) the existence,
or the continuation of the existence, of a Release (including, without
limitation, sudden or non-sudden accidental or non-accidental Releases) of, or
exposure to, any Hazardous Material or other nuisance (to the extent the same
relates to any Hazardous Materials), or other Release in, into or onto the
environment (including, without limitation, the air, soil, surface water or
groundwater) at, in, by, from or related to any property owned or leased by the
Borrower or any of its Subsidiaries or Eligible Joint Ventures or any activities
or operations thereof; (ii) the environmental aspects of the transportation,
storage, treatment or disposal of Hazardous Materials in connection with any
property owned or leased by the Borrower or any of its Subsidiaries or Eligible
Joint Ventures or their operations or facilities; or (iii) the violation, or
alleged violation, of any
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<PAGE> 20
Environmental Laws, Orders or Environmental Permits of or from any Governmental
Authority relating to environmental matters connected with any property owned or
leased by the Borrower or any of its Subsidiaries or Eligible Joint Ventures.
"Environmental Laws" means any applicable federal, state, local or
foreign law (including common law), statute, code, ordinance, rule, regulation
or other requirement having the force or effect of law relating to the
environment, natural resources, or public or employee health and safety and
includes, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA"), 42 U.S.C. ss. 9601 et seq., the
Hazardous Materials Transportation Act, 49 U.S.C. ss. 1801 et seq., the Federal
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. ss. 136 et seq., the
Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. ss. 6901 et seq., the
Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq., the Clean Air Act, 42
U.S.C. ss. 7401 et seq., the Clean Water Act, 33 U.S.C. ss. 1251 et seq., the
Occupational Safety and Health Act, 29 U.S.C. ss. 651 et seq. (to the extent the
same relates to any Hazardous Materials), and the Oil Pollution Act of 1990, 33
U.S.C. ss. 2701 et seq., as such laws have been amended or supplemented, and the
regulations promulgated pursuant thereto, and all analogous state and local
statutes.
"Environmental Liabilities and Costs" means, as to any Person, all
liabilities, obligations, responsibilities, Remedial Actions, losses, damages,
punitive damages, consequential damages, treble damages, costs and expenses
(including, without limitation, all reasonable fees, disbursements and expenses
of counsel, experts and consultants and costs of investigation and feasibility
studies), fines, penalties, sanctions and interest incurred as a result of any
claim or demand by any other Person, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute, including,
without limitation, any thereof arising under any Environmental Law,
Environmental Permit, order or agreement with any Governmental Authority or
other Person, and which relate to any environmental, health or safety condition,
or a Release or threatened Release, and result from the past, present or future
operations of, or ownership of property by, such Person or any of its
Subsidiaries or Eligible Joint Ventures.
"Environmental Lien" means any Lien in favor of any Governmental
Authority arising under any Environmental Law.
"Environmental Permit" means any Permit required under any applicable
Environmental Laws or Order and all supporting documents associated therewith.
12
<PAGE> 21
"ERISA" means the Employee Retirement Income Security Act of 1974 (or
any successor legislation thereto), as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control or treated as a single employer with any Loan
Party within the meaning of Section 414 (b), (c), (m) or (o) of the Code.
"ERISA Event" means (i) an event described in Sections 4043(c)(1), (2),
(3), (5), (6), (8) or (9) of ERISA with respect to a Pension Plan; (ii) the
withdrawal of any Loan Party or any ERISA Affiliate from a Pension Plan subject
to Section 4063 of ERISA during a plan year in which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; (iii) the complete or
partial withdrawal of any Loan Party or any ERISA Affiliate from any
Multiemployer Plan or the insolvency of any Multiemployer Plan; (iv) the filing
of a notice of intent to terminate a Pension Plan or the treatment of a plan
amendment as a termination under Section 4041 of ERISA; (v) the institution of
proceedings by the PBGC to terminate or appoint a trustee to administer a
Pension Plan or Multiemployer Plan; (vi) the failure to make any required
contribution to a Pension Plan; (vii) any other event or condition which might
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan
or Multiemployer Plan; (viii) the imposition of any liability under Title IV of
ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of
ERISA; (ix) a prohibited transaction (as described in Code Section 4975 or ERISA
Section 406) shall occur with respect to any Plan; or (x) any Loan Party or
ERISA Affiliate shall request a minimum funding waiver from the IRS with respect
to any Pension Plan.
"Eurodollar Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Eurodollar Lending Office" below its
name on Schedule II (or, if no such office is specified, its Domestic Lending
Office) or such other office of such Lender as such Lender may from time to time
specify to the Borrower and the Administrative Agent.
"Eurodollar Rate" means, for any Interest Period, an interest rate per
annum equal to the rate per annum obtained by multiplying (a) a rate per annum
equal to the rate for U.S. dollar deposits with maturities comparable to such
Interest Period which appears on Telerate Page 3750 as of 11:00 a.m., London
time, two (2) Business Days prior to the commencement of such Interest Period,
provided, however, that if such rate does not appear on Telerate Page 3750, the
"Eurodollar Rate" applicable to a particular Interest Period shall mean a rate
per annum equal to
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<PAGE> 22
the rate at which U.S. dollar deposits in an amount approximately equal to the
Principal Balance (or the portion thereof which will bear interest at a rate
determined by reference to the Eurodollar Rate during the Interest Period to
which such Eurodollar Rate is applicable in accordance with the provisions
hereof), and with maturities comparable to the last day of the Interest Period
with respect to which such Eurodollar Rate is applicable, are offered in
immediately available funds in the London Interbank Market to the London office
of Chase by leading banks in the Eurodollar market at 11:00 a.m., London time,
two (2) Business Days prior to the commencement of the Interest Period to which
such Eurodollar Rate is applicable, by (b) a fraction (expressed as a decimal)
the numerator of which shall be the number one and the denominator of which
shall be the number one minus the Eurodollar Rate Reserve Percentage for such
Interest Period.
"Eurodollar Rate Loan" means any outstanding principal amount of the
Loans of any Lender that, for an Interest Period, bears interest at a rate
determined with reference to the Eurodollar Rate.
"Eurodollar Rate Reserve Percentage" for any Interest Period means the
aggregate reserve percentages (expressed as a decimal) from time to time
established by the Board of Governors of the Federal Reserve System of the
United States and any other banking authority to which any of the Lenders are
now or hereafter subject, including, but not limited to any reserve on
Eurocurrency Liabilities as defined in Regulation D of the Board of Governors of
the Federal Reserve System of the United States at the ratios provided in such
Regulation from time to time, it being agreed that any portion of the Principal
Balance bearing interest at a rate determined by reference to the Eurodollar
Rate shall be deemed to constitute Eurocurrency Liabilities, as defined by such
Regulation, and it being further agreed that such Eurocurrency Liabilities shall
be deemed to be subject to such reserve requirements without benefit of or
credit for prorations, exceptions or offsets that may be available to any of the
Lenders from time to time under such Regulation and irrespective of whether such
Lender actually maintains all or any portion of such reserve.
"Existing Guarantors" means (i) FelCor/CSS Hotels, L.L.C., a Delaware
limited liability company, (ii) FelCor/LAX Hotels, L.L.C., a Delaware limited
liability company, (iii) FelCor/CSS Holdings, L.P., a Delaware limited
partnership, (iv) FelCor/St. Paul Holdings, L.P., a Delaware limited
partnership, (v) FelCor/LAX Holdings, L.P., a Delaware limited partnership and
(vi) FelCor Eight Hotels L.L.C., a Delaware limited liability company.
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"Existing Subsidiary Guaranty" means each Subsidiary Guaranty dated as
of September 30, 1996 and executed by each Existing Guarantor in favor of the
Lenders, as reaffirmed and ratified pursuant to that certain Reaffirmation and
Ratification of Subsidiary Guaranties dated as of the Effective Date and
executed by the Existing Guarantors in favor of the Lenders.
"Event of Default" has the meaning specified in Section 8.1.
"Facing Fee" shall have the meaning provided in Section 2.4(c).
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"FF&E Reserve" means, for any Person and its Subsidiaries determined on
a consolidated basis in accordance with GAAP (or with respect to any Hotel) for
any period, a reserve equal to four percent (4%) of Room Revenues from any Hotel
owned by such Person or its Subsidiary (or from such Hotel), for such Period
(unless such Person is contractually obligated to reserve a greater percentage
of Room Revenues, in which case such Person shall be required to reserve such
greater amount with respect to such Hotel), plus, for any Person, such Person's
Pro Rata Share of any FF&E Reserve for any Hotel owned by such Person's
Unconsolidated Entities.
"Financial Covenant Imbalance" shall have the meaning set forth in
Section 2.7(c).
"Final Maturity Date" means June 30, 2001.
"Fiscal Quarter" means each of the three month periods ending on March
31, June 30, September 30 and December 31.
"Fiscal Year" means the twelve month period ending on December 31.
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"Fixed Charges" means, for any Person for any period, (a) Gross
Interest Expense for such period plus (b) the aggregate amount of scheduled
principal payments on the Total Indebtedness of such Person (excluding optional
prepayments and scheduled principal payments in respect of any such Total
Indebtedness which is payable in a single installment at final maturity)
required to be made during such period plus (c) dividends required to be paid by
such Person (and its Subsidiaries determined on a consolidated basis in
conformity with GAAP) in connection with preferred Stock issued by such Person
(including such Person's Pro Rata Share of such dividends required to be paid by
such Person's Unconsolidated Entities.)
"Free Cash Flow" means, for any Person for any period, the Adjusted
Funds From Operations for such period less (a) the aggregate FF&E Reserve for
such Person and its Subsidiaries for such period, and (b) the aggregate amount
of scheduled principal payments on the Total Indebtedness of such Person
(excluding optional prepayments and scheduled principal payments in respect of
any such Indebtedness which is payable in a single installment at final
maturity) required to be made during such period.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board, or in such other statements by such other
entity as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of
determination except that, for purposes of Articles V and VII, GAAP shall be
determined on the basis of such principles in effect on the date hereof and
consistent with those used in the preparation of the audited financial
statements referred to in Section 4.5.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity duly exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Gross Interest Expense" means, for any Person for any period, the sum
of (a) the total interest expense in respect of all Indebtedness (excluding all
Contingent Obligations) of such Person and its Subsidiaries for such period
determined on a consolidated basis in conformity with GAAP, plus capitalized
interest of such Person and its Subsidiaries, plus (b) such Person's Pro Rata
Share of Gross Interest Expense of such Person's Unconsolidated Entities.
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<PAGE> 25
"Guarantor" means the Existing Guarantors and each direct and indirect
wholly owned Subsidiary of the Borrower formed or acquired after the date
hereof, provided however, a wholly owned Subsidiary of the Borrower which is
formed or acquired after the date hereof shall only be required to be a
Guarantor if such Subsidiary is a Required Guarantor.
"Hazardous Material" means any substance, material or waste which is
regulated by any Governmental Authority of the United States as a "hazardous
waste," "hazardous material," "hazardous substance," "extremely hazardous
waste," "restricted hazardous waste," "contaminant," "toxic waste," "toxic
substance" or words of similar meaning or import under any provision of
Environmental Law, which includes, but is not limited to, petroleum, petroleum
products, asbestos, urea formaldehyde and polychlorinated biphenyls.
"Hotel" means any Real Estate or Lease comprising an operating facility
offering hotel or other lodging services.
"Hotel Documents" means, with respect to any Hotel, the following
documents:
(i) A description of such Hotel, such description to include the
age, location and number of rooms or suites of such Hotel;
(ii) Details of the Borrower's Investment in such Hotel and, if
available (or able to be reasonably obtained), details of the Adjusted
NOI of such Hotel for the prior four (4) Fiscal Quarters;
(iii) A copy of the most recent ALTA Owner's Policy of Title
Insurance (or commitment to issue such a policy to the Person owning or
to own such Hotel) relating to such Hotel showing the identity of the
fee titleholder thereto and all matters of record as of its date;
(iv) Copies of each of the Operating Lease, Management Agreement
and License relating to such Hotel;
(v) Copies of all engineering, mechanical, structural and
maintenance studies performed by third party consultants with respect
to such Hotel;
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(vi) A "Phase I" environmental assessment of such Hotel prepared
by an environmental engineering firm acceptable to the Administrative
Agent, and any additional environmental studies or assessments
available to the Borrower performed with respect to such Hotel;
(vii) If such Hotel is owned pursuant to a Qualified Lease, a
copy of such Lease together with all and any amendments thereto or
modifications thereof; and
(viii)Such other information as the Administrative Agent may
reasonably request in order to evaluate the Hotel.
"Improvements" has the meaning specified in Section 4.22(c).
"Indebtedness" of any Person means, without duplication, the principal
amount of (i) all indebtedness of such Person for borrowed money (including,
without limitation, reimbursement and all other obligations with respect to
surety bonds, letters of credit and bankers' acceptances, whether or not
matured) or for the deferred purchase price of property or services, (ii) all
obligations of such Person evidenced by notes, bonds, debentures or similar
instruments (including, in the case of the Borrower, the Loans outstanding),
(iii) all indebtedness of such Person created or arising under any conditional
sale or other title retention agreement with respect to property acquired by
such Person (even though the rights and remedies of the seller or lender under
such agreement in the event of default are limited to repossession or sale of
such property), (iv) all Capitalized Lease Obligations of such Person, (v) all
Contingent Obligations of such Person, (vi) all obligations of such Person to
purchase, redeem, retire, defease or otherwise acquire for value (other than for
other equity securities) any Stock or Stock Equivalents of such Person, valued,
in the case of mandatorily redeemable preferred stock, at the greater of its
voluntary or involuntary liquidation preference plus accrued and unpaid
dividends, (vii) all Indebtedness referred to in clause (i), (ii), (iii), (iv),
(v) or (vi) above secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any Lien upon or
in property (including, without limitation, accounts and general intangibles)
owned by such Person, even though such Person has not assumed or become liable
for the payment of such Indebtedness, and (viii) all liabilities of such Person
under Title IV of ERISA.
"Indemnitees" has the meaning specified in Section 10.4.
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"Interest Period" means, (a) in the case of any Eurodollar Rate Loan,
(i) initially, the period commencing on the date such Eurodollar Rate Loan is
made or on the date of conversion of a Base Rate Loan to such Eurodollar Rate
Loan and ending one, two, three, six, nine (to the extent available) or twelve
(to the extent available) months thereafter, as selected by the Borrower in its
Notice of Borrowing or Notice of Conversion or Continuation given to the
Administrative Agent pursuant to Section 2.3 or 2.8, and (ii) thereafter, if
such Loan is continued, in whole or in part, as a Eurodollar Rate Loan pursuant
to Section 2.8, a period commencing on the last day of the immediately preceding
Interest Period therefor and ending one, two, three, six, nine (to the extent
available) or twelve (to the extent available) months thereafter, as selected by
the Borrower in its Notice of Conversion or Continuation given to the
Administrative Agent pursuant to Section 2.8; provided, however, that:
(A) if any Interest Period would otherwise end on a day which is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day, unless the result of such extension would be
to extend such Interest Period into another calendar month, in which
event such Interest Period shall end on the immediately preceding
Business Day;
(B) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month;
(C) the Borrower may not select any Interest Period which ends
after the Final Maturity Date;
(D) Intentionally Omitted.
(E) the Borrower may not select any Interest Period in respect of
Loans having an aggregate principal amount of less than $5,000,000; and
(F) there shall be outstanding at any one time no more than
fifteen (15) Interest Periods in the aggregate.
"Interest Rate Contracts" means interest rate swap agreements, interest
rate cap agreements, interest rate collar agreements, interest rate insurance,
and other agreements or arrangements designed to provide protection against
fluctuations in interest rates.
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"Investment" means, with respect to any Person, (a) any loan or advance
to any other Person, (b) the ownership, purchase or other acquisition of, any
Stock, Stock Equivalents, other equity interest, obligations or other securities
of, (i) any other Person, (ii) all or substantially all of the assets of any
other Person, or (iii) all or substantially all of the assets constituting the
business of a division, branch or other unit operation of any other Person, or
(c) any joint venture or partnership with, or any capital contribution to, or
other investment in, any other Person or any real property.
"Issuing Lender" shall mean Chase.
"IRS" means the Internal Revenue Service, or any successor thereto.
"Joint Enterprise" shall mean with respect to any Person, any joint
venture, corporation, partnership or other business entity which is not
(directly or indirectly) owned 100% by such Person.
"Joint Venture Hotel" means any Hotel owned by an Eligible Joint
Venture.
"JV%" means, with respect to any Eligible Joint Venture, the percentage
ownership interest of Borrower in such Eligible Joint Venture.
"L/C Cash Collateral Account" shall have the meaning set forth in
Section 8.3 hereof.
"L/C Supportable Obligations" shall mean (i) obligations of the
Borrower, or any of its wholly-owned Subsidiaries incurred in the ordinary
course of business with respect to insurance obligations and workers'
compensation, surety bonds and other similar statutory obligations (ii) earnest
money or performance obligations in respect of acquisitions permitted pursuant
to the terms of this Agreement and (iii) such other obligations of the Borrower,
or any of its wholly-owned Subsidiaries as are permitted to exist pursuant to
the terms of this Agreement.
"Leases" means, with respect to the Borrower or any of its Subsidiaries
or Eligible Joint Ventures, all of those leasehold estates in real property
owned by the Borrower or such Subsidiary or Eligible Joint Venture, as lessee,
as such may be
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amended, supplemented or otherwise modified from time to time to the extent
permitted by this Agreement.
"Legal Proceedings" means any judicial, administrative or arbitral
actions, suits, proceedings (public or private) or governmental proceedings.
"Letter of Credit" shall have the meaning provided in Section 2.18(a).
"Letter of Credit Fee" shall have the meaning provided in Section
2.4(b).
"Letter of Credit Outstandings" shall mean, at any time, the sum of (i)
the aggregate Stated Amount of all outstanding Letters of Credit and (ii) the
amount of all Unpaid Drawings.
"Letter of Credit Request" shall have the meaning provided in Section
2.19(a).
"Leverage Ratio" shall mean, at any date, a fraction (expressed as a
percentage) the numerator of which is Total Indebtedness, on such date, and the
denominator of which is Total Value, on such date.
"License" means either (x) an agreement in favor of either the Borrower
or the Operating Lessee as licensee, permitting the use of hotel system
trademarks, trade names and any related rights in connection with the ownership
or operation of any Hotel or (y) a Management Agreement, provided the Manager
under such Management Agreement owns the rights to hotel system trademarks,
trade names and any related rights in connection with the ownership or operation
of any Hotel.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
security interest or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever intended to assure
payment of any Indebtedness or other obligation, including, without limitation,
any conditional sale or other title retention agreement, the interest of a
lessor under a Capitalized Lease Obligation, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing,
under the Uniform Commercial Code or comparable law of any jurisdiction, of any
financing statement naming the owner of the asset to which such Lien relates as
debtor.
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"Loan" means a Revolving Credit Loan or a Term Loan made by a Lender to
the Borrower pursuant to Article II and "Loans" means the aggregate Revolving
Credit Loans and Term Loans.
"Loan Documents" means, collectively, this Agreement, the Notes, the
Subsidiary Guaranties and each certificate, agreement or document executed by a
Loan Party and delivered to the Administrative Agent or any Lender in connection
with or pursuant to any of the foregoing.
"Loan Party" means each of the Borrower and each Guarantor.
"Majority Lenders" means, at any time, Lenders holding at least 51% of
the then aggregate unpaid principal amount of Loans (excluding Loans held by
Non-Funding Lenders) or, if no such Loans are then outstanding, Lenders having
at least 51% of the Commitments of all Lenders (excluding Non-Funding Lenders).
"Management Agreement" means an agreement relating to the operation
and/or management of any Hotel on behalf of the Operating Lessee.
"Manager" means Promus, Sheraton, American General Hospitality, Inc.,
Coastal Hotel Group, Inc., New Bristol or such other manager as shall be
reasonably approved by the Borrower and the Administrative Agent (such consent
not to be unreasonably withheld or delayed) and engaged by the Operating Lessee,
as manager under the Management Agreement.
"Material Adverse Change" means a material adverse change in any of (i)
the condition (financial or otherwise), business, performance, prospects,
operations or properties of (A) either entity which comprises the Borrower or
(B) the Borrower and its Subsidiaries taken as one enterprise, (ii) the
legality, validity or enforceability of any Loan Document, or any material
Operating Lease or the Operating Leases taken as a whole, (iii) the ability of
the Borrower or its Significant Subsidiaries to repay the Obligations or to
perform its obligations under any Loan Document, (iv) the ability of (x) any
Operating Lessee to perform its obligations under any material Operating Lease
or (y) DJONT or New Bristol to perform its obligations under their respective
Operating Leases taken as a whole, or (v) the rights and remedies of the Lenders
or the Administrative Agent under the Loan Documents.
"Material Adverse Effect" means an effect that results in or causes, or
has a reasonable likelihood of resulting in or causing, a Material Adverse
Change.
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"Minimum Tangible Net Worth" means, with respect to the Borrower, at
any time, the sum of (a) $858,000,000; plus (b) 50% of the aggregate net
proceeds received by the Borrower or any of its Subsidiaries after March 31,
1998 in connection with any offering of Stock or Stock Equivalents of the
Borrower and its Subsidiaries taken as a whole.
"Moody's" means Moody's Investor Service Inc.
"Multiemployer Plan" means, as of any applicable date, a multiemployer
plan, as defined in Section 4001(a)(3) of ERISA, and to which any Loan Party,
any of its Subsidiaries or any ERISA Affiliate is making, is obligated to make,
or within the six-year period ending at such date, has made or been obligated to
make, contributions on behalf of participants who are or were employed by any of
them.
"Net Income (Loss)" means, for any Person for any period, the aggregate
of net income (or loss) of such Person and its Subsidiaries for such period,
determined on a consolidated basis in conformity with GAAP.
"Net Operating Income" means, with respect to any Hotel, for any
period, the sum of the following (without duplication) (a) all gross income,
revenues, receipts and all other consideration received by the lessor under the
Operating Lease for such Hotel, including, without limitation, base rent,
percentage and similar rentals, late charges and interest payments, but
excluding extraordinary income and, until earned, security deposits, prepaid
rents and other refundable receipts, minus (b) all expenses incurred by the
owner of such Hotel during such period pursuant to its obligations as lessor
under the Operating Lease for such Hotel, including, without limitation, real
estate taxes, personal property taxes, maintenance and repair costs of a
non-capital nature for the structural portions of such Hotel and premiums
payable for insurance required to be carried by the lessor on or with respect to
such Hotels pursuant to the Operating Lease therefor, but excluding
extraordinary expenses.
"New Bristol" shall mean Bristol Hotels & Resorts, Inc and any Person
controlled by Bristol Hotels and Resorts, Inc. that is a Manager.
"Non-Funding Lender" has the meaning specified in Section 2.14(f).
"Non-Recourse Indebtedness" of any Person means all Indebtedness of
such Person with respect to which recourse for payment is limited to specific
assets encumbered by a Lien securing such Indebtedness; provided, however, that
personal
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recourse of a holder of Indebtedness against any obligor with respect
thereto for fraud, misrepresentation, misapplication of cash, waste and other
circumstances customarily excluded from non-recourse provisions in non-recourse
financing of real estate shall not, by itself, prevent any Indebtedness from
being characterized as Non-Recourse Indebtedness, provided further that if a
personal recourse claim is made in connection therewith, such claim shall not
constitute Non-Recourse Indebtedness for the purposes of this Agreement).
"Note" means, either a Revolving Credit Note or a Term Loan Note and
"Notes" means, collectively, the Revolving Credit Notes and the Term Loan Notes.
"Notice of Borrowing" has the meaning specified in Section 2.3(a).
"Notice of Conversion or Continuation" shall have the meaning set forth
in Section 2.8(b) hereof.
"Obligations" means the Loans, the obligation to pay Unpaid Drawings
and all other advances, debts, liabilities, obligations, covenants and duties
owing by the Borrower to the Administrative Agent, any Lender, the Issuing
Lender, any Affiliate of any of them or any Indemnitee, of every type and
description, present or future, arising under this Agreement or under any other
Loan Document, whether direct or indirect (including, without limitation, those
acquired by assignment), absolute or contingent, due or to become due, now
existing or hereafter arising and however acquired. The term "Obligations"
includes, without limitation, all interest, charges, expenses, fees, attorneys'
fees and disbursements and any other sum then payable by the Borrower under this
Agreement or any other Loan Document.
"OECD" means the Organization for Economic Cooperation and Development.
"Operating Lease" means a lease or sublease relating to any Hotel,
between the Borrower or any of its Subsidiaries or Eligible Joint Ventures or
Unconsolidated Entities, as lessor, and an Operating Lessee, as lessee,
substantially in a form as approved by Administrative Agent.
"Operating Lessee" means either (x) DJONT or its Subsidiary (provided
DJONT owns at least 50% of the voting Stock in such Subsidiary and maintains
voting control over such Subsidiary), or (y) any entity listed on Schedule III
attached hereto, each as lessee under an Operating Lease.
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<PAGE> 33
"Operator" means the Operating Lessee and/or the Manager or both (as
the case may be) responsible for the operation and management of any Hotel.
"Order" means any order, injunction, judgment, decree, ruling,
assessment or arbitration award.
"Other Taxes" has the meaning specified in Section 2.15(b).
"Participant" shall have the meaning provided in Section 2.20(a).
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Pension Plan" means a plan, other than a Multiemployer Plan, which is
covered by Title IV of ERISA or Code Section 412 and which any Loan Party, any
of its Subsidiaries or any ERISA Affiliate maintains, contributes to or has an
obligation to contribute to on behalf of participants who are or were employed
by any of them.
"Permit" means any permit, approval, authorization, license, variance,
registration, permission or consent required from a Governmental Authority under
an applicable Requirement of Law.
"Permitted Liens" means, collectively, (a) Liens arising by operation
of law in favor of materialmen, mechanics, warehousemen, carriers, lessors or
other similar Persons incurred by the Borrower or any of its Subsidiaries or
Eligible Joint Ventures in the ordinary course of business which secure its
obligations to such Person; provided, however, that (i) the Borrower or such
Subsidiary or Eligible Joint Venture is not in default with respect to such
payment obligation to such Person, or (ii) the Borrower or such Subsidiary or
Eligible Joint Venture is in good faith and by appropriate proceedings
diligently contesting such obligation and adequate provision is made for the
payment thereof; (b) Liens (excluding Environmental Liens) securing taxes,
assessments or governmental charges or levies; provided, however, that neither
the Borrower nor any of its Subsidiaries or Eligible Joint Ventures is in
default in respect of any payment obligation with respect thereto unless the
Borrower or such Subsidiary or Eligible Joint Venture is in good faith and by
appropriate proceedings diligently contesting such obligation and adequate
provision is made for the payment thereof; and (c) Zoning restrictions,
subleases, licenses or concessions for restaurants, bars, gift shops, antennas,
communications equipment and similar agreements entered into in the ordinary
course of such Person's business in connection with the ownership
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and operation of a hotel; and easements, licenses, reservations, restrictions on
the use of real property or minor irregularities incident thereto which do not
in the aggregate materially detract from the value or use of the property or
assets of the Borrower or any of its Subsidiaries or Eligible Joint Venture or
impair, in any material manner, the use of such property for the purposes for
which such property is held by the Borrower or any such Subsidiary or Eligible
Joint Venture.
"Permitted Transferee" shall be those entities named on Schedule IV.
"Person" means an individual, partnership, corporation (including,
without limitation, a business trust), limited liability company, joint stock
company, trust, unincorporated association, joint venture or other entity, or a
Governmental Authority.
"Plan" means an employee benefit plan, as defined in Section 3(3) of
ERISA, which any Loan Party or any of its Subsidiaries maintains, contributes to
or has an obligation to contribute to on behalf of participants who are or were
employed by any of them.
"Previous Maximum Revolving Credit Amount" has the meaning specified in
the recitals to this Agreement.
"Principal Balance" means, collectively, the outstanding principal
balances of the Notes from time to time.
"Projections" means those financial projections covering the fiscal
years ending in 1998 through 2000, inclusive, delivered to the Lenders by the
Borrower.
"Promus" means Promus Hotels, Inc., a Delaware corporation or any
Person controlled by Promus Hotel Corporation, that is a Manager.
"Pro Rata Share" means, for any Person, with respect to such Person's
Unconsolidated Entities (or Subsidiaries), the percentage ownership interest of
such Person in such Unconsolidated Entity (or Subsidiary), provided that, in the
event that such Person is the general partner of such Unconsolidated Entity (or
Subsidiary), such Person's Pro Rata Share with respect to such Unconsolidated
Entity (or Subsidiary) shall be the percentage of the general partner interests
owned by such Person in such Unconsolidated Entity (or Subsidiary) with respect
to any Indebtedness for which recourse may be made against any general partner
of such Unconsolidated Entity (or Subsidiary).
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"Qualified Lease" means any Lease (a) which is a direct ground lease
granted by the fee owner of real property, (b) which may be transferred and/or
assigned without the consent of the lessor (or as to which the Lease expressly
provides that (i) such Lease may be transferred and/or assigned with the consent
of the lessor and (ii) such consent shall not be unreasonably withheld or
delayed), (c) which has a remaining term (including any renewal terms
exercisable at the sole option of the lessee) of at least 35 years, (d) under
which no material default has occurred and is continuing, (e) with respect to
which a security interest may be granted without the consent of the lessor (or
as to which the Lease expressly provides that (i) a security interest in such
lease may be granted with the consent of the lessor and (ii) such consent shall
not be unreasonably withheld or delayed), and (f) which contains lender
protection provisions reasonably acceptable to the Administrative Agent.
"Ratable Portion" or "ratably" means, except as otherwise specifically
provided herein, with respect to any Lender, the quotient obtained by dividing
the Commitment (or, if applicable, the Revolving Credit Commitments or the Term
Loan Commitments) of such Lender by the Commitments (or, if applicable, the
Revolving Credit Commitments or the Term Loan Commitments) of all Lenders and
that payments of principal of the Loans and interest thereon shall be made pro
rata in accordance with the respective unpaid principal amounts of the Loans
held by the Lenders.
"R/C Lender" shall mean each Lender which has made a Revolving Credit
Commitment.
"Real Estate" means all of those plots, pieces or parcels of land now
owned or hereafter acquired by the Borrower or any of its Subsidiaries or
Eligible Joint Ventures (the "Land"), including, without limitation, those
listed on Schedule 4.22(a), together with the right, title and interest of the
Borrower or such Subsidiary or Eligible Joint Venture, if any, in and to the
streets, the land lying in the bed of any streets, roads or avenues, opened or
proposed, in front of, adjoining or abutting the Land to the center line
thereof, the air space and development rights pertaining to the Land and the
right to use such air space and development rights, all rights of way,
privileges, liberties, tenements, hereditaments and appurtenances belonging or
in any way appertaining thereto, all fixtures, all easements now or hereafter
benefiting the Land and all royalties and rights appertaining to the use and
enjoyment of the Land, including, without limitation, all alley, vault,
drainage, mineral, water, oil and gas rights, together with all of the buildings
and other improvements now or hereafter erected on the Land, and any fixtures
appurtenant thereto.
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"Recourse Secured Indebtedness" of any Person means the sum of the
following: (A) all Indebtedness of such Person and its Subsidiaries determined
on a consolidated basis in conformity with GAAP which (x) is secured by a Lien
and (y) recourse for payment is not limited to the specific assets encumbered by
such Lien, provided, however, that personal recourse of a holder of Indebtedness
against (i) any Subsidiary (or Unconsolidated Entity) of Borrower formed
specifically for the limited purpose of owning specific assets which secure
Indebtedness which does not exceed 65% of the value of the assets owned by such
Subsidiary (or Unconsolidated Entity) or (ii) any obligor with respect thereto
for fraud, misrepresentation, misapplication of cash, waste and other
circumstances customarily excluded from non-recourse provisions in non-recourse
financing of real estate, shall not, by itself, cause any Indebtedness to be
characterized as Recourse Secured Indebtedness, provided further that if a
personal recourse claim is made in connection therewith, such claim shall
constitute Recourse Secured Indebtedness for the purposes of this Agreement;
plus (B) such Person's Pro Rata Share of Recourse Secured Indebtedness of such
Person's Unconsolidated Entities.
"Refurbishment Hotel" shall mean Hotels, designated by Borrower, which
(i) will experience or are experiencing a disruption in hotel operations due to
refurbishment and (ii) are continuously operating with at least 65% of its rooms
in service at all times. Any given Hotel may only be characterized as a
Refurbishment Hotel for a maximum of six consecutive Fiscal Quarters provided,
however, that the requirement of continuous operation shall not apply with
respect to the Allerton Hotel.
"Register" has the meaning specified in Section 10.7.
"Release" means any release, spill, emission, leaking, pumping,
pouring, dumping, emptying, injection, deposit, disposal, discharge, dispersal,
leaching or migration on or into the indoor or outdoor environment or into or
out of any property.
"Remedial Action" means all actions, including without limitation any
Capital Expenditures, required or necessary to (i) clean up, remove, treat or in
any other way address any Hazardous Material or other substance in the indoor or
outdoor environment, (ii) prevent the Release or threat of Release, or minimize
the further Release, of any Hazardous Material or other substance so it does not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (iii) perform pre-remedial studies and
investigations or post-remedial monitoring and care, or (iv) bring facilities on
any property owned or leased by the
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Borrower or any of its Subsidiaries into compliance with all Environmental Laws
and Environmental Permits.
"Reporting Operating Lessee" shall mean any Operating Lessee which is a
party to Operating Leases which in the aggregate provide at least 25% of
Borrower's consolidated Operating Lease revenue.
"Requested Operating Lessee" shall mean each Operating Lessee which is
a party to Operating Leases which in the aggregate provide at least 10% of
Borrower's consolidated Operating Lease revenue provided such Operating Lessee
has been designated by the Administrative Agent as a Requested Operating Lessee.
"Required Guarantor" shall mean any direct or indirect wholly-owned
Subsidiary of Borrower which is formed after the date hereof, provided, the
value of the assets of such Subsidiary plus the value of the assets of such
Person's Subsidiaries' exceed 10% of Total Value, provided, further, that in the
event the aggregate value of the assets of all wholly-owned Subsidiaries which
are not Guarantors exceed 20% of Total Value then each direct or indirect
wholly-owned Subsidiary formed thereafter shall be deemed a Required Guarantor
if the value of the assets of such Subsidiary plus the value of the assets of
such Person's Subsidiaries' exceed 1% of Total Value.
"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and all federal, state and local laws, rules and regulations, including,
without limitation, federal, state or local securities, antitrust and licensing
laws, all food, health and safety laws, and all applicable trade laws and
requirements, including, without limitation, all disclosure requirements of
Environmental Laws, ERISA and all orders, judgments, decrees or other
determinations of any Governmental Authority or arbitrator, applicable to or
binding upon such Person or any of its property or to which such Person or any
of its property is subject.
"Responsible Officer" means, with respect to any Person, any of the
principal executive officers or general partners of such Person.
"Restricted Payments" has the meaning specified in Section 7.4.
"Revolving Credit Borrowing" means a Borrowing consisting of Revolving
Credit Loans made on the same day by the Lenders ratably according to their
respective Revolving Credit Commitments.
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"Revolving Credit Commitment" means, as to each Lender, the commitment
of such Lender to make Revolving Credit Loans to the Borrower pursuant to
Section 2.1 in the aggregate principal amount outstanding not to exceed the
amount set forth opposite such Lender's name on Schedule I under the caption
"Revolving Credit Commitment", as such amount may be reduced or modified
pursuant to this Agreement, and "Revolving Credit Commitments" means the
aggregate Revolving Credit Commitments of all Lenders.
"Revolving Credit Loan" or "Revolving Credit Loans" means the revolving
credit loan or loans made or to be made by a Lender (or Lenders) to the Borrower
pursuant to Article II.
"Revolving Credit Note" means a promissory note of the Borrower payable
to the order of any Lender in a stated principal amount equal to the amount of
such Lender's Revolving Credit Commitment as originally in effect, in
substantially the form of Exhibit A-1, evidencing the aggregate Indebtedness of
the Borrower to such Lender resulting from the Revolving Credit Loans made by
such Lender and "Revolving Credit Notes" means, collectively the Revolving
Credit Notes.
"Room Revenues" has the meaning ascribed to such term in the form of
Operating Lease attached as Exhibit H hereto.
"S&P" means Standard & Poor's Ratings Group and its successors.
"Settlement Date" has the meaning specified in Section 2.17(d).
"Sheraton" shall mean Sheraton Operating Corporation or any Person
controlled by Starwood Hotels & Resorts Worldwide, Inc. (or its successors or
assigns) that is a Manager.
"Significant Subsidiary" means, at any date of determination, (i) any
Subsidiary of the Borrower which, or (ii) any group of Subsidiaries of the
Borrower which when aggregated, at such date, directly or indirectly own(s) or
lease(s) one or more Hotels having an aggregate value (calculated on the basis
of the Borrower's Investment therein) in excess of $75,000,000.
"Solvent" means, with respect to any Person, that the value of the
assets of such Person (at fair value) is, on the date of determination, greater
than the total amount of liabilities (including, without limitation, contingent
and unliquidated liabilities) of such Person as of such date and that, as of
such date, such Person is
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able to pay all liabilities of such Person as such liabilities mature and does
not have unreasonably small capital. In computing the amount of contingent or
unliquidated liabilities at any time, such liabilities will be computed at the
amount which, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
"Stated Amount" of each Letter of Credit shall, at any time, mean the
maximum
amount available to be drawn thereunder (in each case determined without regard
to whether any conditions to drawing could then be met).
"Status" means the existence of Level I Status, Level II
Status, Level III Status, Level IV Status, Level V Status, Level VI Status,
Level VII Status or Level VIII Status, as the case may be.
As used in this definition:
"Level I Status" exists on any date if, on such date,
either Borrower has a long-term senior unsecured actual debt
rating of A- or better by S&P and A3 or better by Moody's;
"Level II Status" exists on any date if, on such date,
either Borrower has a long-term senior unsecured actual debt
rating of BBB+ by S&P and Baa1 by Moody's;
"Level III Status" exists on any date if, on such date,
either Borrower has a long-term senior unsecured actual debt
rating of BBB by S&P and Baa2 by Moody's;
"Level IV Status" exists on any date if, on such date,
either Borrower has a long-term senior unsecured actual debt
rating of BBB- by S&P and Baa3 by Moody's;
"Level V Status" exists on any date if, on such date
(y) none of Level I Status through Level IV Status exist and
(z) the Leverage Ratio is less than 25%;
"Level VI Status" exists on any date if, on such date
(y) none of Level I Status through Level IV Status exist and
(z) the Leverage Ratio is equal to or greater than 25% but
less than 40%;
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"Level VII Status" exists on any date if, on such date
(y) none of Level I Status through Level IV Status exist and
(z) the Leverage Ratio is equal to or greater than 40% but
less than 45%;
"Level VIII Status" exists on any date if, on such date
(y) none of Level I Status through Level IV Status exist and
(z) the Leverage Ratio is equal to or greater than 45% but
less than or equal to 50%;
provided that (i) if S&P and/or Moody's shall cease to issue ratings of debt
securities of real estate investment trusts generally, then the Administrative
Agent and the Borrower shall negotiate in good faith to agree upon a substitute
rating agency or agencies (and to correlate the system of ratings of each
substitute rating agency with that of the rating agency for which it is
substituting) and (a) until such substitute rating agency or agencies are agreed
upon, Status shall be determined on the basis of the rating assigned by the
other rating agency (or, if both S&P and Moody's shall have so ceased to issue
such ratings, on the basis of the Status in effect immediately prior thereto)
and (b) after such substitute rating agency or agencies are agreed upon, Status
shall be determined on the basis of the rating assigned by the other rating
agency and such substitute rating agency or the two substitute rating agencies,
as the case may be; (ii) if the long term senior unsecured actual debt ratings
of either Borrower by S&P and Moody's are not equivalent, the higher rating will
apply for the purposes of determining Status; and (iii) if the long term senior
unsecured actual debt ratings of either Borrower by S&P and Moody's are two or
more Levels apart, the rating one Level below the higher rating will apply for
the purposes of determining Status.
"Stock" means shares of capital stock, beneficial or partnership
interests, participations or other equivalents (regardless of how designated) of
or in a corporation or equivalent entity, whether voting or non-voting, and
includes, without limitation, common stock and preferred stock.
"Stock Equivalents" means all securities (other than Stock) convertible
into or exchangeable for Stock and all warrants, options or other rights to
purchase or subscribe for any stock, whether or not presently convertible,
exchangeable or exercisable.
"Subsidiary" means, with respect to any Person (other than FelCor LP
with respect to FelCor), at any date, any corporation, partnership or other
business entity the accounts of which would be consolidated with those of such
Person in its
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consolidated financial statements in accordance with GAAP, if such statements
were prepared as of such date.
"Subsidiary Guaranty" means a guaranty, in substantially the form of
Exhibit I, executed by each Guarantor, as such guaranty may be amended,
supplemented or otherwise modified from time to time and includes the Existing
Subsidiary Guaranties.
"Super Majority Lenders" means, at any time, Lenders holding at least
66-2/3% of the then aggregate unpaid principal amount of Loans (excluding Loans
held by Non-Funding Lenders) or, if no such Loans are then outstanding, Lenders
having at least 66-2/3% of the Commitments of all Lenders (excluding Non-Funding
Lenders).
"Swing Advance" has the meaning set forth in Section 2.17.
"Swing Advance Bank" means Chase.
"Tangible Net Worth" means, with respect to the Borrower at any date,
(a) the sum of (i) the total shareholders' equity of FelCor, and (ii) the book
value of all partnership interests in FelCor LP owned by Persons other than
FelCor; minus (b) the sum of all intangible assets of FelCor, each as shown on
the consolidated balance sheet of FelCor as of such date.
"Tax Affiliate" means, as to any Person, (i) any Subsidiary of such
Person, and (ii) any Affiliate of such Person with which such Person files or is
eligible to file consolidated, combined or unitary tax returns.
"Tax Return" has the meaning specified in Section 4.3.
"Taxes" has the meaning specified in Section 2.15(a).
"Telerate Page 3750" means the display designated as "Page 3750" on the
Associated Press-Dow Jones Telerate Service (or such other page as may replace
Page 3750 on the Associated Press-Dow Jones Telerate Service or such other
service as may be nominated by the British Bankers' Association as the
information vendor for the purpose of displaying British Bankers' Association
interest settlement rates for U.S. Dollar deposits). Any Eurodollar Rate
determined on the basis of the rate displayed on Telerate Page 3750 in
accordance with the provisions hereof shall be subject to corrections, if any,
made in such rate and displayed by the Associated
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Press-Dow Jones Telerate Service within one hour of the time when such rate is
first displayed by such Service.
"Term Loan" means a Loan made to the Borrower pursuant to Section 2.2
and "Term Loans" means the aggregate Term Loans.
"Term Loan Borrowing" means a Borrowing consisting of Term Loans made
on the same day by the Lenders ratably according to their respective Term Loan
Commitments.
"Term Loan Commitment" has the meaning specified in Section 2.2.
"Term Loan Maturity Date" shall mean December 31, 1999.
"Term Loan Note" means a promissory note of the Borrower payable to the
order of any Lender in a principal amount equal to the amount of such Lender's
Term Loan Commitment as originally in effect, in substantially the form of
Exhibit A-2, evidencing the Indebtedness of the Borrower to such Lender
resulting from the Term Loan made by such Lender and "Term Loan Notes" means,
collectively the Term Loan Notes.
"Termination Date" means the earliest of (i) the Final Maturity Date,
and (ii) the date of termination in whole of the Commitments pursuant to Section
2.5 or 8.2.
"Total Indebtedness" of any Person means the sum of the following
(without duplication): (a) all Indebtedness of such Person and its Subsidiaries
determined on a consolidated basis in conformity with GAAP, plus (b) such
Person's Pro Rata Share of Indebtedness of such Person's Unconsolidated
Entities, provided, however, Indebtedness of a Person's Subsidiary shall only be
included in the calculation of Total Indebtedness to the extent of the greater
of (x) such Person's Pro-Rata Share of such Indebtedness and (y) the amount of
such Indebtedness guaranteed by such Person.
"Total Secured Indebtedness" of any Person means any Total Indebtedness
of such Person for which the obligations thereunder are secured by a pledge of
or other encumbrance on any assets of such Person or its Subsidiaries or
Unconsolidated Entities.
"Total Value" means the sum of:
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(A) for Hotels owned or leased pursuant to a Qualified Lease
(including newly acquired Hotels and Hotels to be immediately acquired using the
proceeds of any Loans), other than Hotels described in clause (B) below,
Adjusted NOI on a consolidated basis from such Hotels for the preceding four (4)
Fiscal Quarters divided by ten percent (10%); plus
(B) for Hotels owned or leased pursuant to a Qualified Lease by
Borrower (or any Subsidiary or Unconsolidated Entity of Borrower) for less than
four (4) fiscal Quarters and (x) for which the Borrower (or any Subsidiary or
Unconsolidated Entity of Borrower) does not have, or is not able to reasonably
obtain, trailing four quarter audited financial information or (y) which the
Borrower has designated as a Refurbishment Hotel, in each such case 95% of the
Borrower's Investment in such Hotels (provided that if the Allerton Hotel is
designated as a Refurbishment Hotel, then such Hotel shall be valued at 85% of
the Borrower's Investment in such Hotel); plus
(C) the sum of $15,000,000, being the agreed aggregate sum of the
Borrower's investment at cost in (x) certain vacant land at the Kingston
Plantation Hotel in Myrtle Beach, South Carolina, and (y) the Myrtle Beach Condo
Management Company; plus
(D) unencumbered Cash or Cash Equivalents held by the Borrower and
its Subsidiaries (determined on a consolidated basis in accordance with GAAP)
plus the Borrower's Pro Rata Share of unencumbered Cash or Cash Equivalents held
by the Borrower's Unconsolidated Entities;
provided, however, that in the case of (A) above, Adjusted NOI with respect to a
Hotel shall only be included in the calculation of Total Value if such Hotel is,
as at the date of such calculation, owned or leased by Borrower, its Subsidiary
or its Unconsolidated Entity but only to the extent (i) in the case of Adjusted
NOI attributable to the Borrower's Subsidiaries, financial statements prepared
in accordance with GAAP would consolidate such Subsidiary with the Borrower and
(ii) in the case of Adjusted NOI attributable to the Borrower's Unconsolidated
Entities, of the Borrower's Pro Rata Share of such Adjusted NOI, and provided,
further, in the case of (B) above, the Borrower's Investment with respect to a
Hotel shall only be included in the calculation of Total Value if such Hotel is,
as of the date of such calculation, owned by Borrower, its Subsidiary or
Unconsolidated Entity. Notwithstanding the foregoing, in no event shall more
than 20% of Total Value be attributable to Refurbishment Hotels which are valued
at 95% (or 85% in the case of the Allerton Hotel) of Borrower's Investment.
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"Unconsolidated Entity" means, with respect to any Person, at any date,
any other Person in whom such Person holds an Investment, which Investment is
accounted for in the financial statements of such Person on an equity basis of
accounting and whose financial results would not be consolidated under GAAP with
the financial results of such Person on the consolidated financial statements of
such Person, if such statements were prepared as of such date.
"Unencumbered" means, with respect to any Hotel, at any date of
determination, the circumstance that such Hotel on such date:
(a) is not subject to any Liens (including restrictions on
transferability or assignability) of any kind (including any such Lien or
restriction imposed by (i) any agreement governing Indebtedness, and (ii) the
organizational documents of the Borrower or any of its Subsidiaries or Eligible
Joint Ventures, but excluding Permitted Liens and, in the case of any Qualified
Lease (to the extent permitted by the definition thereof), restrictions on
transferability or assignability in respect of such Lease);
(b) is not subject to any agreement (including (i) any agreement
governing Indebtedness, and (ii) if applicable, the organizational documents of
the Borrower or any of its Subsidiaries or Eligible Joint Ventures) which
prohibits or limits the ability of the Borrower or any of its Subsidiaries or
Eligible Joint Ventures to create, incur, assume or suffer to exist any Lien
upon such Hotel, other than Permitted Liens (excluding any agreement or
organizational document (x) which limits generally the amount of Indebtedness
which may be incurred by the Borrower or its Subsidiaries or Eligible Joint
Ventures or (y) in the case of an Eligible Joint Venture which is not an
Eligible Entity, which requires the consent of partners (or the equivalent) in
such Eligible Joint Venture (other than the Borrower or its wholly owned
Subsidiaries) to create, incur, assume or suffer to exist any Lien upon such
Hotel); and
(c) is not subject to any agreement (including any agreement governing
Indebtedness) which entitles any Person to the benefit of any Lien (other than
Permitted Liens) on such Hotel, or would entitle any Person to the benefit of
any such Lien upon the occurrence of any contingency (including, without
limitation, pursuant to an "equal and ratable" clause, other than those certain
equal and ratable clauses contained in those certain (x) 7 3/8% Redeemable
Senior Notes due 2004 issued by FelCor Suites Limited Partnership and (y) 7 5/8%
Redeemable Senior Notes due 2007 issued by FelCor Suites Limited Partnership).
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For the purposes of this Agreement, any Joint Venture Hotel or Hotel owned by a
Subsidiary or Eligible Joint Venture of the Borrower shall not be deemed to be
Unencumbered unless both (i) such Hotel and (ii) all Stock owned directly or
indirectly by Borrower in such Eligible Joint Venture or Subsidiary, is
Unencumbered.
"Unencumbered Hotel Property" means, collectively, (a) such of the
Hotels owned or leased by the Borrower or any of its direct or indirect
wholly-owned Subsidiaries, and (b) such of the Joint Venture Hotels, as in each
case shall meet at any time and from time to time, each of the following minimum
criteria:
(a) such Hotel is Unencumbered;
(b) such Hotel is free of all material structural and title defects
and other material adverse matters;
(c) such Hotel is, as of the date upon which such Hotel is included
as an Unencumbered Hotel Property and as of the end of each
succeeding Fiscal Quarter, (i) in compliance, in all material
respects, with all applicable Environmental Laws, and (ii) not
subject to any material Environmental Liabilities and Costs, in
each case as initially verified by a written report of an
environmental consultant reasonably acceptable to the
Administrative Agent;
(d) such Hotel is (i) owned in fee simple by, or (ii) leased pursuant
to a Qualified Lease in favor of, the Borrower or its direct or
indirect wholly-owned Subsidiary or an Eligible Joint Venture;
provided that, if a Joint Venture Hotel is owned by an Eligible Joint Venture
which owns more than a single Hotel, such Joint Venture Hotel shall only be an
Unencumbered Hotel Property if it satisfies all of the requirements set forth in
subparagraphs (a) through (d) above and all other Hotels owned by such Eligible
Joint Venture satisfy the conditions set forth in subparagraphs (a) and (c)
above, provided further that the parties acknowledge and agree that the Embassy
Suites Hotel located at Los Angeles Airport, CA is subject to a mortgage in
favor of FelCor LP but the Administrative Agent has agreed, as a one time waiver
only, to accept such Hotel as Unencumbered (for purposes of clause (a) above)
provided that such Hotel shall cease to be Unencumbered (for purposes of clause
(a) above), inter alia, in the event that FelCor LP assigns its mortgage to any
other Person.
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"Unencumbered NOI" shall mean Adjusted NOI from each Unencumbered Hotel
Property, provided, that (i) only Borrower's JV% of Adjusted NOI generated by
any Joint Venture Hotel shall be included in Unencumbered NOI and (ii) in no
event shall more than 25% of Unencumbered NOI be attributable to Unencumbered
Hotel Properties leased pursuant to Qualified Leases.
"Unpaid Drawing" shall have the meaning set forth in Section 2.21(a).
"Unsecured Interest Expense" means, for any Person for any period, the
greater of (I) the sum of (a) the total interest expense in respect of all
unsecured Indebtedness of such Person (excluding, on an annual basis, up to
$3,000,000 of non-cash expense which is attributable to the amortization of
costs and expenses incurred in connection with the incurrance of such
Indebtedness) and its Subsidiaries for such period determined on a consolidated
basis in conformity with GAAP, plus capitalized interest of such Person and its
Subsidiaries in respect of unsecured Indebtedness, plus (b) such Person's Pro
Rata Share of Unsecured Interest Expense of such Person's Unconsolidated
Entities and (II) 7.5% of the sum of (a) the average outstanding balance of all
unsecured Indebtedness of such Person and its Subsidiaries for such period
determined on a consolidated basis in conformity with GAAP plus (b) such
Person's Pro Rata Share of unsecured Indebtedness of such Person's
Unconsolidated Entities for such period.
1.2. Computation of Time Periods. In this Agreement, in the computation
of periods of time from a specified date to a later specified date, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding" and the word "through" means "to and including".
1.3. Accounting Terms. All accounting terms not specifically defined
herein shall be construed in conformity with GAAP and all accounting
determinations required to be made pursuant hereto shall, unless expressly
otherwise provided herein, be made in conformity with GAAP.
1.4. Certain Terms. (a) The words "herein," "hereof" and "hereunder"
and other words of similar import refer to this Agreement as a whole, and not to
any particular Article, Section, subsection or clause in this Agreement.
References herein to an Exhibit, Schedule, Article, Section, subsection or
clause refer to the appropriate Exhibit or Schedule to, or Article, Section,
subsection or clause in this Agreement.
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(b) The terms "Lender" and "Administrative Agent" include
their respective successors and the term "Lender" includes each assignee of such
Lender who becomes a party hereto pursuant to Section 10.7.
ARTICLE II
AMOUNTS AND TERMS OF THE LOANS AND LETTERS OF CREDIT
2.1. The Revolving Credit Loans. On the terms and subject to the
conditions contained in this Agreement, each Lender severally agrees to make
loans (each a "Revolving Credit Loan") to the Borrower from time to time on any
Business Day during the period from the date hereof until (but not including)
the Termination Date in an aggregate amount not to exceed at any time
outstanding such Lender's Revolving Credit Commitment; provided, however, that
at no time shall any Lender be obligated to make a Revolving Credit Loan in
excess of such Lender's Ratable Portion of the Available Credit. Within the
limits of each Lender's Revolving Credit Commitment, amounts prepaid pursuant to
Section 2.7(b) may be reborrowed under this Section 2.1. The Revolving Credit
Loans of each Lender shall be evidenced by the Revolving Credit Note to the
order of such Lender.
2.2. The Term Loans. On the terms and subject to the conditions
contained in this Agreement, each Lender severally agrees to make a loan (each a
"Term Loan") to the Borrower, and Borrower agrees to borrow the Term Loans, on
the Bristol Effective Date, in an amount not to exceed the amount set opposite
such Lender's name on Schedule I as its Term Loan Commitment (such Lender's
"Term Loan Commitment"). Amounts prepaid pursuant to Section 2.7(c) may not be
reborrowed. The Term Loan of each Lender shall be evidenced by the Term Note to
the order of such Lender. Notwithstanding anything to the contrary contained
herein, Borrower shall not be permitted to borrow any portion of any Term Loan
prior to the Bristol Effective Date.
2.3. Making the Loans. (a) Each Revolving Credit Borrowing shall be
made on notice, given by the Borrower to the Administrativ e Agent not later
than (i) 11:00 A.M. (New York City time) on the third (3rd) Business Day prior
to the date of the proposed Revolving Credit Borrowing in the case of Eurodollar
Rate Loans, and (ii) 11:00 A.M. (New York City time) on the Business Day prior
to the date of the proposed Revolving Credit Borrowing in the case of Base Rate
Loans. Each such notice (a "Notice of Borrowing") shall be in substantially the
form of Exhibit B, specifying therein (i) the date of such proposed Revolving
Credit
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Borrowing, (ii) the aggregate amount of such proposed Revolving Credit
Borrowing, (iii) the amount thereof, if any, requested to be Eurodollar Rate
Loans, and (iv) the initial Interest Period or Periods for any such Eurodollar
Rate Loans. The Loans shall be made as Base Rate Loans unless (subject to
Section 2.12) the Notice of Borrowing specifies that all or a pro rata portion
thereof shall be Eurodollar Rate Loans; provided, however, that the aggregate of
the Eurodollar Rate Loans for each Interest Period must be in an amount of not
less than $5,000,000 or an integral multiple of $500,000 in excess thereof.
(b) The Term Loan Borrowing shall be made upon receipt of a Notice of
Borrowing (which clearly indicates that such Notice of Borrowing is requesting a
Term Loan Borrowing), given by the Borrower to the Administrative Agent not
later than 11:00 A.M. (New York City time) on the third (3rd) Business Day prior
to the Bristol Effective Date. The Notice of Borrowing shall specify therein (i)
the Bristol Merger Date, (ii) the amount thereof, if any, requested to be
Eurodollar Rate Loans, and (iii) the initial Interest Period or Periods for such
Eurodollar Rate Loans. The Term Loans shall be made as Base Rate Loans unless
(subject to Section 2.12) the applicable Notice of Borrowing specifies that all
or a pro rata portion thereof shall be Eurodollar Rate Loans; provided, however,
that the aggregate of the -------- ------- Eurodollar Rate Loans for each
Interest Period must be in an amount of not less than $5,000,000 or an integral
multiple of $500,000 in excess thereof.
(c) The Administrative Agent shall give to each Lender prompt notice of
the Administrative Agent's receipt of a Notice of Borrowing and, if Eurodollar
Rate Loans are properly requested in such Notice of Borrowing, the applicable
interest rate under Section 2.9, and each Lender's Ratable Portion of the
proposed Borrowing. Each Lender shall, before 12:00 Noon (New York City time) on
the date of the proposed Borrowing, make available for the account of its
Applicable Lending Office to the Administrative Agent at its address referred to
in Section 10.2, in immediately available funds, such Lender's Ratable Portion
of such proposed Borrowing. By 12:00 Noon (New York City time) in the case of
Eurodollar Rate Loans and Base Rate Loans, on the date specified by the Borrower
in the Notice of Borrowing, subject to fulfillment of the applicable conditions
set forth in Article III, the Administrative Agent will make such funds
available to the Borrower at the Administrative Agent's aforesaid address;
provided that in the event that the Administrative Agent shall have received
notice from a Lender prior to the date of any proposed Borrowing that such
Lender will not make available to the Administrative Agent such Lender's Ratable
Portion of such Borrowing, the Administrative Agent shall be under no obligation
to fund such Lender's Ratable Portion of such Borrowing.
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(d) Each Base Rate Loan shall be in an aggregate amount of not less
than $1,000,000 or an integral multiple of $100,000 in excess thereof.
(e) Intentionally omitted.
(f) Each Notice of Borrowing shall be irrevocable and binding on the
Borrower. In the case of any proposed Borrowing which the related Notice of
Borrowing specifies is to be comprised of Eurodollar Rate Loans, the Borrower
shall indemnify each Lender against any loss, cost or expense incurred by such
Lender as a result of any failure to fulfill on or before the date specified in
such Notice of Borrowing for such proposed Borrowing the applicable conditions
set forth in Article III, including, without limitation, any loss (including,
without limitation, loss of anticipated profits), cost or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Lender to fund any Eurodollar Rate Loan to be made by such Lender as part
of such proposed Borrowing when such Eurodollar Rate Loan, as a result of such
failure, is not made on such date.
(g) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any proposed Borrowing that such Lender will not
make available to the Administrative Agent such Lender's Ratable Portion of such
Borrowing, the Administrative Agent may assume that such Lender has made such
Ratable Portion available to the Administrative Agent on the date of such
Borrowing in accordance with this Section 2.3 and the Administrative Agent may,
in reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not have so
made such Ratable Portion available to the Administrative Agent, such Lender and
the Borrower severally agree to repay to the Administrative Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Administrative Agent, at (i) in the case of the
Borrower, the interest rate applicable at the time to the Loans comprising such
Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such
Lender shall repay to the Administrative Agent such corresponding amount, such
amount so repaid shall constitute such Lender's Loan as part of such Borrowing
for purposes of this Agreement. If the Borrower shall repay to the
Administrative Agent such corresponding amount, such payment shall not relieve
such Lender of any obligation it may have to the Borrower hereunder.
(h) The failure of any Lender to make the Loan to be made by it as part
of any Borrowing shall not relieve any other Lender of its obligation, if any,
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hereunder to make its Loan on the date of such Borrowing, but no Lender shall be
responsible for the failure of any other Lender to make the Loan to be made by
such other Lender on the date of any Borrowing.
2.4. Fees. (a) The Borrower agrees to pay to the Administrative Agent
for the account of each Lender, (i) a commitment fee (the "Revolving Commitment
Fee") equal to the Applicable Margin times the average daily unused portion of
such Lender's Revolving Credit Commitment, from the date hereof until the
Termination Date and (ii) a commitment fee equal to the Applicable Margin times
the average daily unused portion of such Lender's Term Loan Commitment
(notwithstanding the non-occurrence of the Bristol Effective Date), from the
date hereof until the earlier of the date the Borrower (x) borrows the entire
amount of the Term Loan or (y) terminates in their entirety (pursuant to the
terms hereof) the Lenders Term Loan Commitments (the "Term Loan Commitment Fee"
together with the Revolving Commitment Fee, the "Commitment Fees"). The
Commitment Fees shall be payable in arrears with respect to each full and
partial calendar quarter on (i) the last day of each calendar quarter during the
term of such Lender's Commitment, commencing June 30, 1998, (ii) on the date of
any reduction of the Commitments pursuant to Section 2.5, (iii) on the
Termination Date and (iv) on the date Lenders make the Term Loans. For purposes
of this Section 2.4, Swing Advances shall be included as part of the unused
portion of the Commitments.
(b) The Borrower agrees to pay to the Administrative Agent for
distribution to each Lender (based on its respective Ratable Portion) a fee in
respect of each Letter of Credit issued hereunder (the "Letter of Credit Fee"),
for the period from and including the date of issuance of such Letter of Credit
to and including the termination of such Letter of Credit, computed at a rate
per annum equal to the Applicable Margin then in effect for Loans maintained as
Eurodollar Rate Loans on the daily average Stated Amount of such Letter of
Credit. Accrued Letter of Credit Fees shall be payable in arrears with respect
to each calendar quarter on (i) the last day of each calendar quarter in which
any Letter of Credit is outstanding, (ii) on the date on which no Letters of
Credit remain outstanding and (iii) on the Termination Date.
(c) The Borrower agrees to pay to the Issuing Lender, for its own
account, a facing fee in respect of each Letter of Credit issued by it hereunder
(the "Facing Fee") for the period from and including the date of issuance of
such Letter of Credit to and including the termination of such Letter of Credit,
computed at a rate per annum equal to 0.125% of the daily average Stated Amount
of such Letter of Credit. Accrued Facing Fees shall be payable in arrears with
respect to each calendar
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quarter on (i) the last day of each calendar quarter in which such Letter of
Credit is outstanding, (ii) on the date upon which such Letter of Credit has
been terminated in accordance with its terms and (iii) on the Termination Date.
(d) The Borrower shall pay, upon each Drawing under, issuance of, or
amendment to, any Letter of Credit, such amount as shall at the time of such
event be the administrative charge which the Issuing Lender is generally
imposing in connection with such occurrence with respect to letters of credit.
(e) The Borrower has agreed to pay to Chase additional fees, the amount
and dates of payment of which are embodied in a separate agreement between the
Borrower and Chase.
2.5. Reduction and Termination of the Commitments. (a) The Borrower
may, upon at least three Business Days' prior notice to the Administrative
Agent, terminate in whole or reduce ratably in part the unused portions of the
respective Revolving Credit Commitments of the Lenders; provided, however, that
each partial reduction shall be in the aggregate amount of not less than
$5,000,000 or an integral multiple of $1,000,000 in excess thereof. After August
15, 1998, if the Bristol Effective Date has not occurred, the Borrower may, upon
at least three Business Days' prior notice to the Administrative Agent,
terminate in whole (but not in part) the Term Loan Commitments of the Lenders.
(b) Upon the making of the Term Loan Borrowing, each Lender's Term Loan
Commitment shall terminate.
2.6. Repayment. (a) The Borrower shall repay the entire unpaid
principal amount of the Revolving Credit Loans on the Termination Date.
(b) The Borrower shall repay the entire unpaid principal amount of the
Term Loans on the Term Loan Maturity Date.
2.7. Prepayments. (a) The Borrower shall have no right to prepay the
principal amount of any Loan other than as provided in this Section 2.7.
(b) The Borrower may, upon at least two (2) Business Days' prior notice
to the Administrative Agent, stating the proposed date and aggregate principal
amount of the prepayment, prepay the outstanding principal amount of the Loans
in whole or ratably in part, together with accrued interest to the date of such
prepayment on the principal amount prepaid; provided, however, that any
prepayment of any
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Eurodollar Rate Loan made other than on the last day of an Interest Period for
such Loan shall be subject to payment by the Borrower to the Administrative
Agent of any costs, fees or expenses incurred by any Lender in connection with
such prepayment including without limitation any costs to unwind any Eurodollar
Rate contracts; and, provided, further, that each partial prepayment shall be in
an aggregate principal amount not less than $3,000,000 or integral multiples of
$100,000 in excess thereof. Upon the giving of such notice of prepayment, the
principal amount of the Loans specified to be prepaid shall become due and
payable on the date specified for such prepayment.
(c) If at any time the Borrower shall not be in compliance with the
covenant contained in Section 5.1 hereof, (a "Financial Covenant Imbalance"),
the Borrower shall prepay the Loans then outstanding in an amount necessary to
cure such Financial Covenant Imbalance, together with accrued interest as
follows:
(i) in the event that the Financial Covenant Imbalance is due to
(A) any sale, conveyance, transfer, assignment or other disposition of an
Unencumbered Hotel Property, (B) a financing secured by a Hotel or (C) a
Drawing, the prepayment shall be made within one (1) Business Day of such
event occurring;
(ii) in the event that the Financial Covenant Imbalance is due to
any (A) condemnation or taking by eminent domain of an Unencumbered Hotel
Property, or (B) loss, damage or destruction by casualty to any Hotel,
the prepayment shall be made within one (1) Business Day after receipt by
the Borrower or its Subsidiary or Eligible Joint Venture of the
condemnation award or insurance proceeds relating to such event;
(iii) INTENTIONALLY DELETED; or
(iv) in the event that the Financial Covenant Imbalance is due to a
determination by the Administrative Agent, after review of the applicable
Hotel Documents, that an Unencumbered Hotel Property, represented by
Borrower in a Compliance Certificate to be an Unencumbered Hotel
Property, fails to meet (and never actually met) the requirements for
Unencumbered Hotel Properties set forth herein, the prepayment shall be
made within 5 Business Days of the Administrative Agent notifying
Borrower of such Hotel's failure to meet the Unencumbered Hotel Property
requirements.
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(d) If at any time the aggregate principal amount of Revolving Credit
Loans outstanding at such time exceeds the Revolving Credit Commitments at such
time, the Borrower shall forthwith prepay the Revolving Credit Loans then
outstanding in an amount equal to such excess, together with accrued interest.
2.8. Conversion/Continuation Option. (a) Swing Advances shall be
automatically converted to Base Rate Loans on the Business Day following the
date of borrowing thereof.
(b) The Borrower may elect (i) at any time to convert Base Rate Loans
or any portion thereof to Eurodollar Rate Loans, (ii) at any time to convert
Swing Advances or any portion thereof to Base Rate Loans or Eurodollar Rate
Loans, or (iii) at the end of any Interest Period with respect thereto, to
convert Eurodollar Rate Loans or any portion thereof into Base Rate Loans, or to
continue such Eurodollar Rate Loans or any portion thereof for an additional
Interest Period; provided, however, that the aggregate of the Eurodollar Rate
Loans for each Interest Period therefor must be in the amount of $5,000,000 or
an integral multiple of $500,000 in excess thereof. Each conversion or
continuation shall be allocated among the Loans of all Lenders in accordance
with their Ratable Portion. Each such election shall be in substantially the
form of Exhibit C hereto (a "Notice of Conversion or Continuation") and shall be
made by giving the Administrative Agent at least three (3) Business Days' prior
written notice thereof specifying (A) the amount and type of conversion or
continuation, (B) in the case of a conversion to or a continuation of Eurodollar
Rate Loans, the Interest Period therefor, and (C) in the case of a conversion,
the date of conversion (which date shall be a Business Day and, if a conversion
from Eurodollar Rate Loans, shall also be the last day of the Interest Period
therefor). The Administrative Agent shall promptly notify each Lender of its
receipt of a Notice of Conversion or Continuation and of the contents thereof
and such Lender's Ratable Portion of the Loans to be converted. Notwithstanding
the foregoing, no conversion in whole or in part of Base Rate Loans or Swing
Advances to Eurodollar Rate Loans, and no continuation in whole or in part of
Eurodollar Rate Loans upon the expiration of any Interest Period therefor, shall
be permitted at any time at which a Default or an Event of Default shall have
occurred and be continuing. If, within the time period required under the terms
of this Section 2.8, the Administrative Agent does not receive a Notice of
Conversion or Continuation from the Borrower containing a permitted election to
continue any Eurodollar Rate Loans for an additional Interest Period or to
convert any such Loans, then, upon the expiration of the Interest Period
therefor, such Loans will be automatically converted to Base Rate Loans. Each
Notice of Conversion or Continuation shall be irrevocable.
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2.9. Interest. (a) The Borrower shall pay interest on the unpaid
principal amount of each Loan from the date thereof until the principal amount
thereof shall be paid in full, at the following rates per annum:
(i) For Base Rate Loans, at a rate per annum equal at all times to
the Base Rate in effect from time to time plus the Applicable Margin,
payable monthly on the first day of each month, on the Termination Date
and on the date any Base Rate Loan is converted or paid in full.
(ii) For Eurodollar Rate Loans, at a rate per annum equal at all
times during the applicable Interest Period for each Eurodollar Rate Loan
to the sum of the Eurodollar Rate for such Interest Period plus the
Applicable Margin in effect on the most recent Applicable Margin Reset
Date, payable on the last day of such Interest Period, on the Termination
Date and, if such Interest Period has a duration of more than three
months, on the last day of each calendar quarter during such Interest
Period commencing on March 31, 1998. Notwithstanding anything to the
contrary contained herein (including but not limited to the grid
contained in the definition of Applicable Margin), the Applicable Margin
with respect to a Term Loan maintained as a Eurodollar Rate Loan shall
never be less than 100 basis points.
(b) If the principal indebtedness of the Loans is declared immediately
due and payable by the Administrative Agent pursuant to the provisions of this
Agreement or any other Loan Document, or if the Loans are not paid in full on
the Termination Date, the Borrower shall thereafter, unless and until such date,
if any, as the Super Majority Lenders may elect, in their sole and absolute
discretion, to waive, in writing, all or any portion of such default rate
interest, pay interest on the principal sum then remaining unpaid from the date
of such declaration or the Termination Date, as the case may be, until the date
on which the principal sum then outstanding is paid in full (whether before or
after judgment), at a rate per annum (calculated for the actual number of days
elapsed on the basis of a 360-day year) equal to the greater, on a daily basis,
of (x) 13% or (y) 4% plus the Base Rate, provided, however, that such interest
rate shall in no event exceed the maximum interest rate which the Borrower may
by law pay.
2.10. Interest Rate Determination and Protection. (a) The Eurodollar
Rate for each Interest Period for Eurodollar Rate Loans shall be determined by
the Administrative Agent two (2) Business Days before the first day of such
Interest Period.
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(b) The Administrative Agent shall give prompt notice to the Borrower
and the Lenders of the applicable interest rate determined by the Administrative
Agent for purposes of Section 2.9(a) or (b).
(c) If, with respect to Eurodollar Rate Loans, the Majority Lenders in
good faith notify the Administrative Agent that the Eurodollar Rate for any
Interest Period therefor will not adequately reflect the cost to such Majority
Lenders of making such Loans or funding or maintaining their respective
Eurodollar Rate Loans for such Interest Period, the Administrative Agent shall
forthwith so notify the Borrower and the Lenders, whereupon
(i) each Eurodollar Rate Loan will automatically, on the last day
of the then existing Interest Period therefor, convert into a Base Rate
Loan; and
(ii) the obligations of the Lenders to make Eurodollar Rate Loans
or to convert Base Rate Loans into Eurodollar Rate Loans shall be
suspended until the Administrative Agent shall notify the Borrower that
such Lenders have determined that the circumstances causing such
suspension no longer exist.
2.11. Increased Costs. If, due to either (i) the introduction of or any
change in or in the interpretation of any law or regulation (other than any
change by way of imposition or increase of reserve requirements included in
determining the Eurodollar Rate Reserve Percentage) or (ii) compliance with any
guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in the
cost to any Lender of agreeing to make or making, funding or maintaining any
Eurodollar Rate Loans, then the Borrower shall from time to time, upon demand by
such Lender (with a copy of such demand to the Administrative Agent), pay to the
Administrative Agent for the account of such Lender additional amounts
sufficient to compensate such Lender for such increased cost. A certificate as
to the amount of such increased cost, submitted to the Borrower and the
Administrative Agent by such Lender, shall be conclusive and binding for all
purposes, absent manifest error. If the Borrower so notifies the Administrative
Agent within five Business Days after any Lender notifies the Borrower of any
increased cost pursuant to the foregoing provisions of this Section 2.11, the
Borrower may either (A) prepay in full all Eurodollar Rate Loans of such Lender
then outstanding in accordance with Section 2.7(b) and, additionally, reimburse
such Lender for such increased cost in accordance with this Section 2.11 or (B)
convert all Eurodollar Rate Loans of all Lenders then outstanding into Base Rate
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Loans in accordance with Section 2.8 and, additionally, reimburse such Lender
for such increased cost in accordance with this Section 2.11.
2.12. Illegality. Notwithstanding any other provision of this
Agreement, if the introduction of or any change in or in the interpretation of
any law or regulation shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender or its
Eurodollar Lending Office to make Eurodollar Rate Loans or to continue to fund
or maintain Eurodollar Rate Loans, then, on notice thereof and demand therefor
by such Lender to the Borrower through the Administrative Agent, (i) the
obligation of such Lender to make or to continue Eurodollar Rate Loans and to
convert Base Rate Loans into Eurodollar Rate Loans shall terminate and (ii) the
Borrower shall forthwith prepay in full all Eurodollar Rate Loans of such Lender
then outstanding, together with interest accrued thereon, unless the Borrower,
within five Business Days of such notice and demand, converts all Eurodollar
Rate Loans of all Lenders then outstanding into Base Rate Loans.
2.13. Capital Adequacy. If (i) the introduction of or any change in or
in the interpretation of any law or regulation, (ii) compliance with any law or
regulation, or (iii) compliance with any guideline or request from any central
bank or other Governmental Authority (whether or not having the force of law)
affects or would affect the amount of capital required or expected to be
maintained by any Lender or any corporation controlling any Lender and such
Lender reasonably determines that such amount is based upon the existence of
such Lender's Commitments, Letters of Credit or Loans and its other commitments,
letters of credit or loans of this type, then, upon demand by such Lender (with
a copy of such demand to the Administrative Agent), the Borrower shall pay to
the Administrative Agent for the account of such Lender, from time to time as
specified by such Lender, additional amounts sufficient to compensate such
Lender in the light of such circumstances, to the extent that such Lender
reasonably determines such increase in capital to be allocable to the existence
of such Lender's Commitments, Loans, Letter of Credit Outstandings or
commitments to issue Letters of Credit. A certificate as to such amounts
submitted to the Borrower and the Administrative Agent by such Lender shall be
conclusive and binding for all purposes absent manifest error.
2.14. Payments and Computations. (a) The Borrower shall make each
payment hereunder and under the Notes not later than 11:00 A.M. (New York City
time) on the day when due, in Dollars, to the Administrative Agent at its
address referred to in Section 10.2 in immediately available funds without
set-off or counterclaim. The Administrative Agent will promptly thereafter cause
to be
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distributed immediately available funds relating to the payment of principal or
interest or fees (other than amounts payable pursuant to Section 2.11, 2.12,
2.13, 2.15 or 2.17) to the Lenders, in accordance with their respective Ratable
Portions, for the account of their respective Applicable Lending Offices, and
like funds relating to the payment of any other amount payable to any Lender to
such Lender for the account of its Applicable Lending Office, in each case to be
applied in accordance with the terms of this Agreement. To the extent the
foregoing payments are received by the Administrative Agent prior to 11:00 A.M.
(New York City time) and are not distributed to the Lenders on the same day, the
Administrative Agent shall pay to each Lender in addition to the amount
distributed to such Lender, interest thereon, for each day from the date such
amount is received by the Administrative Agent until the date such amount is
distributed to such Lender, at the Federal Funds Rate. Payment received by the
Administrative Agent after 11:00 A.M. (New York City time) shall be deemed to be
received on the next Business Day.
(b) The Borrower hereby authorizes each Lender, if and to the extent
payment owed to such Lender is not made when due hereunder or under any Loan
held by such Lender, to charge from time to time against any or all of the
Borrower's accounts with such Lender any amount so due.
(c) All computations of interest based on the Base Rate, the Eurodollar
Rate or the Federal Funds Rate and of fees shall be made by the Administrative
Agent on the basis of a year of 360 days, in each case for the actual number of
days (including the first day but excluding the last day) occurring in the
period for which such interest and fees are payable. Each determination by the
Administrative Agent of an interest rate hereunder shall be conclusive and
binding for all purposes, absent manifest error.
(d) Whenever any payment hereunder or under the Notes shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fee, as the case may be;
provided, however, that if such extension would cause payment of interest on or
principal of any Eurodollar Rate Loan to be made in the next calendar month,
such payment shall be made on the next preceding Business Day.
(e) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due hereunder to the Lenders
that the Borrower will not make such payment in full, the Administrative Agent
may assume that the Borrower has made such payment in full to the Administrative
Agent
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on such date and the Administrative Agent may, in reliance upon such assumption,
cause to be distributed to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the Borrower shall not have so
made such payment in full to the Administrative Agent, each Lender shall repay
to the Administrative Agent forthwith on demand such amount distributed to such
Lender together with interest thereon, for each day from the date such amount is
distributed to such Lender until the date such Lender repays such amount to the
Administrative Agent, at the Federal Funds Rate.
(f) If any Lender (a "Non-Funding Lender") has (x) failed to make a
Loan required to be made by it hereunder, and the Administrative Agent has
determined that such Lender is not likely to make such Loan, (y) given notice to
the Borrower or the Administrative Agent that it will not make, or that it has
disaffirmed or repudiated any obligation to make, Loans, in each case by reason
of the provisions of the Financial Institutions Reform, Recovery and Enforcement
Act of 1989 or otherwise or (z) failed to comply with its obligations pursuant
to Section 2.20(c), (i) such Non-Funding Lender shall lose any and all voting
rights hereunder, and (ii) any payment made on account of the principal of the
Loans outstanding or Unpaid Drawings shall be made as follows:
(A) in the case of any such payment made on any date when and to
the extent that, in the determination of the Administrative Agent, the
Borrower would be able, under the terms and conditions hereof, to
reborrow the amount of such payment under the Commitments and to satisfy
any applicable conditions precedent set forth in Article III to such
reborrowing, such payment shall be made on account of the outstanding
Loans or Unpaid Drawings held by the Lenders other than the Non-Funding
Lender pro rata according to the respective outstanding principal amounts
of the Loans or Unpaid Drawings of such Lenders;
(B) otherwise, such payment shall be made on account of the
outstanding Loans or Unpaid Drawings held by the Lenders pro rata
according to the respective outstanding principal amounts of such Loans
or Unpaid Drawings; and
(C) any payment made on account of interest on the Loans or Unpaid
Drawings shall be made pro rata according to the respective amounts of
accrued and unpaid interest due and payable on the Loans or Unpaid
Drawings with respect to which such payment is being made.
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2.15. Taxes. (a) Any and all payments by the Borrower under each Loan
Document shall be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, excluding, in the case of each Lender
and the Administrative Agent, taxes measured by its net income, and franchise
taxes imposed on it, by the jurisdiction under the laws of which such Lender or
the Administrative Agent (as the case may be) is organized or any political
subdivision thereof and, in the case of each Lender, taxes measured by its net
income, and franchise taxes imposed on it, by the jurisdiction of such Lender's
Applicable Lending Office or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities (excluding, in the case of such Lender or the Administrative Agent,
taxes imposed by reason of any failure of such Lender or the Administrative
Agent, if such Lender or the Administrative Agent is entitled at such time to a
total or partial exemption from withholding that is required to be evidenced by
a United States Internal Revenue Service Form 1001 or 4224 or any successor or
additional form (including but not limited to Form W8), to deliver to the
Administrative Agent or the Borrower, from time to time as required by the
Administrative Agent or the Borrower, such Form 1001 or 4224 (as applicable) or
any successor or additional form (including but not limited to Form W8),
completed in a manner reasonably satisfactory to the Administrative Agent or the
Borrower) being hereinafter referred to as "Taxes"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Lender or the Administrative Agent (i) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including, without limitation, deductions applicable to additional sums payable
under this Section 2.15) such Lender or the Administrative Agent (as the case
may be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxing authority or
other authority in accordance with applicable law, and (iv) the Borrower shall
deliver to the Administrative Agent evidence of such payment to the relevant
taxation or other authority.
(b) In addition, the Borrower agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies of the United States or any political subdivision thereof or any
applicable foreign jurisdiction which arise from any payment made under any Loan
Document or from the execution, delivery or registration of, or otherwise with
respect to, any Loan Document (collectively, "Other Taxes").
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(c) The Borrower will indemnify each Lender and the Administrative
Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.15) paid by such Lender or the Administrative Agent
(as the case may be) and any liability (including, without limitation, for
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
This indemnification shall be made within 30 days from the date such Lender or
the Administrative Agent (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes, the Borrower will furnish to the Administrative Agent, at its address
referred to in Section 10.2, the original or a certified copy of a receipt
evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.15 shall survive the payment in full of the Obligations.
(f) Prior to the Effective Date in the case of each Lender that is a
signatory hereto, and on the date of the Assignment and Acceptance pursuant to
which it becomes a Lender in the case of each other Lender and from time to time
thereafter if requested by the Borrower or the Administrative Agent, each Lender
organized under the laws of a jurisdiction outside the United States that is
entitled to an exemption from United States withholding tax, or that is subject
to such tax at a reduced rate under an applicable tax treaty, shall provide the
Administrative Agent and the Borrower with an IRS Form 4224 or Form 1001 or
other applicable form (including but not limited to Form W8), certificate or
document prescribed by the IRS certifying as to such Lender's entitlement to
such exemption or reduced rate with respect to all payments to be made to such
Lender hereunder and under the Notes. Unless the Borrower and the Administrative
Agent have received forms or other documents satisfactory to them indicating
that payments hereunder or under any Note are not subject to United States
withholding tax or are subject to such tax at a rate reduced by an applicable
tax treaty, the Borrower or the Administrative Agent shall withhold taxes from
such payments at the applicable statutory rate in the case of payments to or for
any Lender organized under the laws of a jurisdiction outside the United States.
(g) Any Lender claiming any additional amounts payable pursuant to this
Section 2.15 shall use its best efforts (consistent with its internal policy and
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legal and regulatory restrictions) to change the jurisdiction of its Applicable
Lending Office if the making of such a change would avoid the need for, or
reduce the amount of, any such additional amounts which may thereafter accrue
and would not, in the reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender.
2.16. Sharing of Payments, Etc. If any Lender (other than the Swing
Advance Bank or the Issuing Lender) shall obtain any payment (whether voluntary,
involuntary, through the exercise of any right of set off or otherwise) on
account of Loans made by it (other than pursuant to Section 2.13 or 2.15), and
there is either (x) any Swing Advance outstanding in respect of which the Swing
Advance Bank has not received payment in full from the Lenders pursuant to
Section 2.17(d) or (e) or (y) any Unpaid Drawing in respect of which the Issuing
Lender has not received payment in full from the Lenders pursuant to Section
2.20 or 2.21, such Lender (a "Purchasing Lender") shall purchase a participation
in all such Swing Advances or Unpaid Drawings, as applicable, in an amount equal
to the lesser of such payment and the amount of such Swing Advances or Unpaid
Drawings, as applicable, for which the Swing Advance Bank or Issuing Lender has
not so received payment in full. If, after giving effect to the foregoing, any
Lender shall obtain any payment (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) on account of the Loans made by
it (other than pursuant to Sections 2.13 or 2.15) in excess of its Ratable
Portion of payments on account of the Loans obtained by all the Lenders, such
Lender shall forthwith purchase from the other Lenders such participations in
their Loans as shall be necessary to cause such purchasing Lender to share the
excess payment ratably with each of them.
2.17. Swing Advances. (a) The Swing Advance Bank, on the terms and
subject to the conditions contained in this Agreement, shall make advances (each
a "Swing Advance") to the Borrower from time to time on any Business Day during
the period from the date hereof until the day preceding the Termination Date in
an aggregate amount not to exceed at any time outstanding the lesser of (i)
$15,000,000, and (ii) the Available Credit; provided that the Swing Advance Bank
shall not be requested to make a Swing Advance to refinance an outstanding Swing
Advance. Within the limits set forth above, Swing Advances repaid may be
reborrowed under this Section 2.17.
(b) Each Swing Advance shall be made upon a Notice of Borrowing for a
Swing Advance being given by the Borrower to the Swing Advance Bank by no later
than 11:00 A.M. (New York City time) on the Business Day of the proposed Swing
Advance. Upon fulfillment of the applicable conditions set forth in Article III,
the Swing Advance Bank will make each Swing Advance available on the same day to
the Borrower at the Administrative Agent's address referred to in Section 10.2.
All Swing Advances shall bear interest at the same rate, and be payable on the
same basis, as Base Rate Loans and shall be converted to Base Rate Loans
pursuant to Section 2.8(a).
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(c) Each Swing Advance shall be in an aggregate amount of not less than
$1,000,000.00 or an integral multiple of $100,000.00 in excess thereof.
(d) The Administrative Agent shall give to each R/C Lender prompt
notice of the Administrative Agent's receipt of a Notice of Borrowing for a
Swing Advance and each R/C Lender's Ratable Portion thereof. Each R/C Lender
shall before 12:00 Noon (New York City time) on the next Business Day (the
"Settlement Date") make available to the Administrative Agent, in immediately
available funds, the amount of its Ratable Portion of the principal amount of
such Swing Advance. Upon such payment by a R/C Lender, such R/C Lender shall be
deemed to have made a Revolving Credit Loan to the Borrower in the amount of
such payment. The Administrative Agent shall use such funds to repay the Swing
Advance to the Swing Advance Bank. To the extent that any R/C Lender fails to
make such payment to the Swing Advance Bank, the Borrower shall repay such Swing
Advance on demand and, in any event, on the Termination Date.
(e) During the continuance of a Default under Section 8.1(e), each R/C
Lender shall acquire, without recourse or warranty, an undivided participation
in each Swing Advance otherwise required to be repaid by such R/C Lender
pursuant to the preceding paragraph, which participation shall be in a principal
amount equal to such R/C Lender's Ratable Portion of such Swing Advance, by
paying to the Swing Advance Bank on the date on which such R/C Lender would
otherwise have been required to make a payment in respect of such Swing Advance
pursuant to the preceding paragraph, in immediately available funds, an amount
equal to such R/C Lender's Ratable Portion of such Swing Advance. If such amount
is not in fact made available to the Swing Advance Bank on the date when the
Swing Advance would otherwise be required to be made pursuant to the preceding
paragraph, the Swing Advance Bank shall be entitled to recover such amount on
demand from that R/C Lender together with interest accrued from such date at the
Federal Funds Rate. From and after the date on which any R/C Lender purchases an
undivided participation interest in a Swing Advance pursuant to this paragraph
(e), the Swing Advance Bank shall promptly distribute to such R/C Lender such
R/C Lender's Ratable Portion of all payments of principal and of interest on
such Swing Advance, other than those received from a R/C Lender pursuant to
Section 2.16 or this or the preceding paragraph (d). If any payment made by or
on behalf of the Borrower and
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received by the Swing Advance Bank with respect to any Swing Advance is
rescinded or must otherwise be returned by the Swing Advance Bank for any reason
and the Swing Advance Bank has made a payment to the Administrative Agent, on
account thereof, each R/C Lender shall, upon notice to the Swing Advance Bank,
forthwith pay over to the Swing Advance Bank an amount equal to such R/C
Lender's pro rata share of the payment so rescinded or returned based on the
respective amounts paid in respect thereof to the R/C Lenders pursuant to the
preceding paragraph (d).
2.18. Letter of Credit. (a) Subject to and upon the terms and
conditions herein set forth, the Borrower may request that the Issuing Lender
issue, at any time and from time to time on and after the Closing Date and prior
to the Termination Date, for the account of the Borrower and for the benefit of
any holder (or any trustee, agent or other similar representative for any such
holders) of L/C Supportable Obligations of the Borrower, an irrevocable standby
letter of credit, in a form customarily used by the Issuing Lender or in such
other form as has been approved by the Issuing Lender in its discretion (each
such standby letter of credit, a "Letter of Credit") in support of such L/C
Supportable Obligations.
(b) Subject to the terms and conditions contained herein, the Issuing
Lender hereby agrees that it will, at any time and from time to time on or after
the Closing Date and prior to the Termination Date, following its receipt of the
respective Letter of Credit Request, issue for the account of the Borrower one
or more Letters of Credit in support of such L/C Supportable Obligations of the
Borrower as are permitted to remain outstanding without giving rise to a Default
or Event of Default hereunder, provided that the Issuing Lender shall be under
no obligation to issue any Letter of Credit if at the time of such issuance:
(i) any order, judgment or decree of any governmental authority or
arbitrator shall purport by its terms to enjoin or restrain the Issuing
Lender from issuing such Letter of Credit or any requirement of law
applicable to the Issuing Lender or any request or directive (whether or
not having the force of law) from any governmental authority with
jurisdiction over the Issuing Lender shall prohibit, or request that the
Issuing Lender refrain from, the issuance of letters of credit generally
or such Letter of Credit in particular or shall impose upon the Issuing
Lender with respect to such Letter of Credit any restriction or reserve
or capital requirement (for which the Issuing Lender is not otherwise
compensated) not in effect on the date hereof, or any unreimbursed loss,
cost or expense which was not applicable, or known to the Issuing Lender
as of the date hereof and which the Issuing Lender in good faith deems
material to it; or
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(ii) the Issuing Lender shall have received notice from any Lender
prior to the issuance of such Letter of Credit of the type described in
the second sentence of Section 2.19(b).
(c) Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued the Stated Amount of which, when added to the Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid on the date of, and
prior to the issuance of, the respective Letter of Credit) and the aggregate
principal amount of all Revolving Credit Loans then outstanding, would exceed
the Revolving Credit Commitments at such time, (ii) each Letter of Credit shall
be denominated in Dollars, (iii) each Letter of Credit shall by its terms
terminate on or before the earlier of (A) the date which occurs 12 months after
the date of the issuance thereof (although any such Letter of Credit may be
automatically extendable for successive periods of up to 12 months, but not
beyond the tenth Business Day prior to the Termination Date, on terms acceptable
to the Issuing Lender) and (B) the tenth Business Day prior to the Termination
Date, (iv) the Stated Amount of each Letter of Credit upon issuance shall be not
less than $100,000 or such lesser amount as is acceptable to the Issuing Lender.
2.19 Letter of Credit Requests. (a) Whenever the Borrower desires that
a Letter of Credit be issued for its account, the Borrower shall give the
Administrative Agent and the Issuing Lender at least five Business Days' (or
such shorter period as is acceptable to the Issuing Lender) written notice
thereof. Each notice shall be in the form of Exhibit K (each a "Letter of Credit
Request").
(b) The making of each Letter of Credit Request shall be deemed to be a
representation and warranty by the Borrower that such Letter of Credit may be
issued in accordance with, and will not violate the requirements of, Section
2.18(c). Unless the Issuing Lender has received notice from any R/C Lender
before it issues a Letter of Credit that one or more of the conditions specified
in Article III, are not then satisfied, or that the issuance of such Letter of
Credit would violate Section 2.18(c), then the Issuing Lender may issue the
requested Letter of Credit for the account of the Borrower in accordance with
the Issuing Lender's usual and customary practices. Upon the issuance of any
Letter of Credit, the Issuing Lender shall promptly notify each R/C Lender of
such issuance and such notice shall be accompanied by a copy of the issued
Letter of Credit.
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2.20 Letter of Credit Participations. (a) Immediately upon the issuance
by the Issuing Lender of any Letter of Credit, the Issuing Lender shall be
deemed to have sold and transferred to each R/C Lender, other than the Issuing
Lender (each such Lender, in its capacity under Section 2.20, a "Participant"),
and each such Participant shall be deemed irrevocably and unconditionally to
have purchased and received from the Issuing Lender, without recourse or
warranty, an undivided interest and participation, to the extent of such
Participant's Ratable Portion, in such Letter of Credit, each drawing made
thereunder and the obligations of the Borrower under this Agreement with respect
thereto (excluding the Facing Fee), and any security therefor or guaranty
pertaining thereto. Upon any change in the Revolving Credit Commitments of the
R/C Lenders, it is hereby agreed that, with respect to any outstanding Letters
of Credit and Unpaid Drawings, there shall be an automatic adjustment to the
participations pursuant to this Section 2.20 to reflect the new Ratable Portions
of the R/C Lenders.
(b) In determining whether to pay under any Letter of Credit, the
Issuing Lender shall have no obligation relative to the other Lenders other than
to confirm that any documents required to be delivered under such Letter of
Credit appear to have been delivered and that they appear to comply on their
face with the requirements of such Letter of Credit. Any action taken or omitted
to be taken by the Issuing Lender under or in connection with any Letter of
Credit if taken or omitted in the absence of gross negligence or willful
misconduct, shall not create for the Issuing Lender any resulting liability to
the Borrower or any Lender.
(c) In the event that the Issuing Lender makes any payment under any
Letter of Credit and the Borrower shall not have reimbursed such amount in full
to the Issuing Lender pursuant to Section 2.21(a), the Issuing Lender shall
promptly notify the Administrative Agent, which shall promptly notify each
Participant, of such failure, and each Participant shall promptly and
unconditionally pay to the Issuing Lender the amount of such Participant's
Ratable Portion of such unreimbursed payment in Dollars and same day funds. If
the Administrative Agent so notifies any Participant prior to 11:00 A.M. (New
York time) on any Business Day, such Participant shall make available such funds
to the Issuing Lender on such Business Day. If and to the extent such
Participant shall not have so made its Ratable Portion of the amount of such
payment available to the Issuing Lender, such Participant agrees to pay to the
Issuing Lender, forthwith on demand such amount, together with interest thereon,
for each day from such date until the date such amount is paid to the Issuing
Lender at the overnight Federal Funds Rate. The failure of any Participant to
make available to the Issuing Lender its Ratable Portion of any payment under
any Letter of Credit shall not relieve any other Participant of its obligation
hereunder to
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make available to the Issuing Lender its Ratable Portion of any payment under
Letter of Credit on the date required, as specified above, but no Participant
shall be responsible for the failure of any other Participant to make available
to the Issuing Lender such other Participant's Ratable Portion of any such
payment.
(d) Whenever the Issuing Lender receives a payment of a reimbursement
obligation as to which it has received any payments from the Participants
pursuant to clause (c) above, the Issuing Lender shall forward such payment to
the Administrative Agent, which in turn shall distribute such funds to each
Participant in accordance with the terms of Section 2.14.
(e) Upon the request of any Participant, the Issuing Lender shall
furnish to such Participant copies of any Letter of Credit issued by it and such
other documentation as may reasonably be requested by such Participant.
(f) The obligations of the Participants to make payments to the Issuing
Lender with respect to Letters of Credit issued by it shall be irrevocable and
not subject to any qualification or exception whatsoever and shall be made in
accordance with the terms and conditions of this Agreement under all
circumstances, including, without limitation any of the following circumstances:
(i) any lack of validity or enforceability of this Agreement or
any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or other right
which the Borrower or any of its Subsidiaries may have at any time
against a beneficiary named in a Letter of Credit, any transferee of any
Letter of Credit (or any Person for whom any such transferee may be
acting), the Administrative Agent, the Issuing Lender, any Participant,
or any other Person, whether in connection with this Agreement, any
Letter of Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between the Borrower
and the beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or any other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents; or
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(v) the occurrence of any Default or Event of Default.
2.21 Agreement to Repay Letter of Credit Drawings. (a) The Borrower
hereby agrees to reimburse the Issuing Lender, by making payment to the
Administrative Agent in accordance with the terms of the first sentence of
Section 2.14, for any drawing (each, a "Drawing") made by it under any Letter of
Credit (each such Drawing until reimbursed, an "Unpaid Drawing"), no later than
five (5) Business Days after the date of such Drawing, with interest on the
amount of such Drawing, to the extent not reimbursed prior to 11:00 A.M. (New
York time) on the date of such Drawing, from and including the date of such
Drawing to but excluding the date the Issuing Lender was reimbursed by the
Borrower therefor at a rate per annum which shall be the Base Rate in effect
from time to time plus the Applicable Margin for Loans maintained as Base Rate
Loans, provided, however, to the extent such amounts are not reimbursed prior to
11:00 A.M. (New York time) on the sixth Business Day following such Drawing,
interest shall thereafter accrue on the amount (and until reimbursed by the
Borrower) at a rate per annum which shall be the Base Rate in effect from time
to time plus 4%, in each such case, with interest to be payable on demand. The
Issuing Lender shall give the Borrower prompt written notice of each Drawing
under any Letter of Credit, provided that the failure to give any such notice
shall in no way affect, impair or diminish the Borrower's obligations hereunder.
(b) The obligations of the Borrower under this Section 2.21 to
reimburse the Issuing Lender with respect to Drawings (including interest
thereon) shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment which the
Borrower may have or have had against any Lender (including in its capacity as
the Issuing Lender or as a Participant), or any nonapplication or misapplication
by the beneficiary of the proceeds of such Drawing, the Issuing Lender's only
obligation to the Borrower being to confirm that any documents required to be
delivered under such Letter of Credit appear to have been delivered and that
they appear to comply on their face with the requirements of such Letter of
Credit. Any action taken or omitted to be taken by the Issuing Lender under or
in connection with any Letter of Credit if taken or omitted in the absence of
gross negligence or willful misconduct, shall not create for the Issuing Lender
any resulting liability to the Borrower.
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ARTICLE III
CONDITIONS TO EFFECTIVENESS
OF THIS AGREEMENT AND OF LENDING
AND OF ISSUANCE OF LETTERS OF CREDIT
3.1. Conditions Precedent to Effectiveness of this Agreement, to
Initial Loans and Letters of Credit. The effectiveness of this Agreement and the
obligation of each Lender to make its initial Loan hereunder and the obligation
of the Issuing Lender to issue a Letter of Credit hereunder is subject to
satisfaction of the conditions precedent that the Administrative Agent shall
have received counterparts of this Agreement duly executed by each Borrower,
each Lender and the Administrative Agent, together with the following, each
dated the Effective Date (hereinafter defined) unless otherwise indicated, in
form and substance satisfactory to the Administrative Agent and (except for the
Notes) in sufficient copies for each Lender (the date of satisfaction of the
conditions precedent set forth in this Section 3.1 and in Section 3.2 being the
"Effective Date"):
(a) The Notes to the order of the Lenders, respectively.
(b) A certificate of the Secretary or an Assistant Secretary of each
Loan Party (or, as applicable, of such Loan Party's partners) certifying (i) the
resolutions of its Board of Trustees or Directors, as appropriate, approving
each Loan Document to which it is a party, (ii) all documents evidencing other
necessary trust, partnership or corporate action, as appropriate, and required
governmental and third party approvals, licenses and consents with respect to
each Loan Document to which it is a party and the transactions contemplated
thereby, (iii) a copy of its and each of its Subsidiaries' and Eligible Joint
Ventures' declaration of trust, certificates of incorporation, by-laws,
partnership agreements and certificates of partnership as appropriate, as of the
Effective Date, and (iv) the names and true signatures of each of its officers
who has been authorized to execute and deliver any Loan Document or other
document required hereunder to be executed and delivered by or on behalf of such
Person.
(c) A copy of the declaration of trust or articles or certificate of
incorporation or partnership agreement or certificate of partnership, as
appropriate, of each Loan Party and of each of its Subsidiaries and Eligible
Joint Ventures which is not a Loan Party certified as of a recent date by the
Secretary of State of the state of formation of such Loan Party or Subsidiary,
together with certificates of such official
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attesting to the good standing of each such Loan Party, Subsidiary and Eligible
Joint Ventures.
(d) Favorable opinion(s) of counsel to the Loan Parties, in
substantially the form(s) of Exhibit D, and as to such other matters as any
Lender through the Administrative Agent may reasonably request.
(e) A certificate of the chief financial officer of the Borrower,
stating that the Borrower is Solvent after giving effect to the initial Loans,
the application of the proceeds thereof in accordance with Section 6.10 and the
payment of all estimated legal, accounting and other fees related hereto and
thereto.
(f) Evidence that the insurance required by Section 6.4 is in full
force and effect.
(g) Such additional documents, information and materials as any Lender,
through the Administrative Agent, may reasonably request.
(h) A certificate, signed by a Responsible Officer of the Borrower,
stating that the following statements are true and correct on the Effective
Date:
(i) The statements set forth in Section 3.3 are true after giving
effect to the Loans being made on the Effective Date.
(ii) All costs and accrued and unpaid fees and expenses
(including, without limitation, legal fees and expenses) required to be
paid to the Lenders on or before the Effective Date, including, without
limitation, those referred to in Sections 2.4 and 10.4, to the extent
then due and payable, have been paid.
(iii) All necessary governmental and third party approvals
required to be obtained by any Loan Party in connection with the
transactions contemplated hereby have been obtained and remain in effect,
and all applicable waiting periods have expired without any action being
taken by any competent authority which restrains, prevents, impedes,
delays or imposes materially adverse conditions upon any of the
transactions contemplated hereby.
(iv) There exists no judgment, order, injunction or other
restraint prohibiting or imposing materially adverse conditions upon any
of the transactions contemplated hereby.
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(v) There exists no claim, action, suit, investigation or
proceeding (including, without limitation, shareholder or derivative
litigation) pending or, to the knowledge of the Borrower, threatened in
any court or before any arbitrator or Governmental Authority which
relates to the Loan Documents or the financing hereunder or which, if
adversely determined, would have a Material Adverse Effect.
(vi) There has been no Material Adverse Change since December 31,
1997 in the corporate, capital or legal structure of the Borrower or any
of its Subsidiaries without the consent of the Administrative Agent.
(vii) The Borrower's Tangible Net Worth is not less than the
Minimum Tangible Net Worth.
(i) Administrative Agent's reasonable satisfaction with the form and
substance of each Operating Lease.
(j) A Compliance Certificate, executed by the Chief Financial Officer
of the Borrower substantially in the form attached as Exhibit G hereto (a
"Compliance Certificate"), and if requested by the Administrative Agent,
together with copies (to the extent not already delivered) of the Hotel
Documents in respect of each Hotel indicated by Administrative Agent.
(k) Each Subsidiary Guaranty, duly executed by the Guarantor party
thereto.
3.2. Additional Conditions Precedent to Effectiveness of this
Agreement, to Initial Loans and Letters of Credit. The effectiveness of this
Agreement, the obligation of each Lender to make its initial Loan hereunder and
the obligation of the Issuing Lender to issue Letters of Credit hereunder is
subject to the further conditions precedent that:
(a) No Lender or the Issuing Lender in its sole judgment exercised
reasonably shall have determined (i) that there has been any Material Adverse
Change since December 31, 1997 or (ii) that there has occurred any adverse
change which such Lender deems material in the financial markets generally,
since December 31, 1997 or (iii) that there is any claim, action, suit,
investigation, litigation or proceeding (including, without limitation,
shareholder or derivative litigation) pending or threatened in any court or
before any arbitrator or Governmental Authority which, if adversely determined,
would have a Material Adverse Effect; and nothing shall
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have occurred since December 31, 1997 which, in the judgment of any Lender, has
had a Material Adverse Effect.
(b) Each Lender and the Issuing Lender shall be satisfied, in its sole
judgment, exercised reasonably, with the corporate, capital, legal and
management structure of the Borrower and its Subsidiaries, and shall be
satisfied, in its sole judgment exercised reasonably, with the nature and status
of all Contractual Obligations, securities, labor, tax, ERISA, employee benefit,
environmental, health and safety matters, in each case, involving or affecting
the Borrower or any of its Subsidiaries.
3.3. Conditions Precedent to Each Loan and Letter of Credit. The
obligation of each Lender to make any Loan (including the Loan being made by
such Lender on the Effective Date) and the obligation of the Issuing Lender to
issue a Letter of Credit shall be subject to the further conditions precedent
that:
(a) The following statements shall be true on the date of such Loan or
issuance, before and after giving effect thereto and to the application of the
proceeds therefrom (and the acceptance by the Borrower of the proceeds of such
Loan or such Letter of Credit shall constitute a representation and warranty by
the Borrower that on the date of such Loan or issuance such statements are
true):
(i) The representations and warranties of the Borrower contained
in Article IV and of each Loan Party in the other Loan Documents are
correct on and as of such date as though made on and as of such date (it
being understood and agreed that any representation or warranty which by
its terms is made on a specified date shall be required to be true and
correct only as of such specified date); and
(ii) No Default or Event of Default exists or will result from the
Loans being made or the Letters of Credit being issued on such date.
(b) The making of the Loans or the issuance of the Letters of Credit on
such date does not violate any Requirement of Law and is not enjoined,
temporarily, preliminarily or permanently.
(c) The Administrative Agent shall have received a Compliance
Certificate, executed by a Responsible Officer of the Borrower, satisfactory to
the Administrative Agent, and if requested by the Administrative Agent, together
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with copies (to the extent not already delivered) of the Hotel Documents in
respect of each Hotel indicated by Administrative Agent.
(d) The Administrative Agent shall have received such additional
documents, information and materials as any Lender, through the Administrative
Agent, may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Lenders and the Administrative Agent to enter into this
Agreement, the Borrower represents and warrants to the Lenders and the
Administrative Agent that on and after the Effective Date:
4.1. Existence; Compliance with Law. Each Loan Party and each of its
Subsidiaries and Eligible Joint Ventures (i) is a real estate investment trust
or a corporation, limited liability company or limited partnership, as specified
herein, duly organized, validly existing and in good standing under the laws of
the jurisdiction of its formation; (ii) is duly qualified as a foreign
corporation, limited liability company or limited partnership and in good
standing under the laws of each jurisdiction where such qualification is
necessary, except for failures which in the aggregate have no Material Adverse
Effect; (iii) has all requisite corporate, limited liability company or
partnership power and authority and the legal right to own, pledge and mortgage
its properties, to lease (as lessee) the properties that it leases as lessee, to
lease or sublease (as lessor) the properties it owns and/or leases (as lessee)
and to conduct its business as now or currently proposed to be conducted; (iv)
is in compliance with its declaration of trust or certificate of or formation
and by-laws, regulations or partnership agreement, as appropriate; (v) is in
compliance with all other applicable Requirements of Law except for such
non-compliances as in the aggregate have no Material Adverse Effect; and (vi)
has all necessary licenses, permits, consents or approvals from or by, has made
all necessary filings with, and has given all necessary notices to, each
Governmental Authority having jurisdiction, to the extent required for such
ownership, leasing and conduct, except for licenses, permits, consents or
approvals which can be obtained by the taking of ministerial action to secure
the grant or transfer thereof or failures which in the aggregate have no
Material Adverse Effect.
4.2. Power; Authorization; Enforceable Obligations. (a) The execution,
delivery and performance by each Loan Party of the Loan Documents to
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which it is
a party and the consummation of the transactions related to the financing
contemplated hereby:
(i) are within such Loan Party's corporate, partnership or trust
powers, as appropriate;
(ii) have been duly authorized by all necessary corporate,
partnership or trust action, as appropriate, including, without
limitation, the consent of stockholders and general and/or limited
partners where required;
(iii) do not and will not (A) contravene any Loan Party's or any
of its Subsidiaries' or Eligible Joint Ventures' respective declaration
of trust, certificate of incorporation or formation or by-laws,
regulations, partnership agreement or other comparable governing
documents, (B) violate any other applicable Requirement of Law
(including, without limitation, Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System), or any order or decree of any
Governmental Authority or arbitrator, (C) conflict with or result in the
breach of, or constitute a default under, or result in or permit the
termination or acceleration of, any material Contractual Obligation of
any Loan Party or any of its Subsidiaries or Eligible Joint Ventures, or
(D) result in the creation or imposition of any Lien upon any of the
property of any Loan Party or any of its Subsidiaries or Eligible Joint
Ventures; and
(iv) do not require the consent of, authorization by, approval of,
notice to, or filing or registration with, any Governmental Authority or
any other Person, other than those which have been obtained or made and
copies of which have been or will be delivered to the Administrative
Agent pursuant to Section 3.1, and each of which on the Effective Date
will be in full force and effect.
(b) This Agreement has been, and each of the other Loan Documents has
been, or will have been upon delivery thereof pursuant to Section 3.1, duly
executed and delivered by each Loan Party thereto. This Agreement is, and the
other Loan Documents are or will be, when delivered hereunder, the legal, valid
and binding obligation of each Loan Party thereto, enforceable against it in
accordance with its terms except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting the enforcement of
creditor's rights and remedies generally.
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4.3. Taxes. All federal, state, local and foreign tax returns, reports
and statements (collectively, the "Tax Returns") required to be filed by the
Borrower or any of its Tax Affiliates have been filed with the appropriate
governmental agencies in all jurisdictions in which such Tax Returns, are
required to be filed, all such Tax Returns are true and correct in all material
respects, and all taxes, charges and other impositions due and payable have been
timely paid prior to the date on which any fine, penalty, interest, late charge
or loss may be added thereto for non-payment thereof, except where contested in
good faith and by appropriate proceedings if (i) adequate reserves therefor have
been established on the books of the Borrower or such Tax Affiliate in
conformity with GAAP and (ii) all such non-payments in the aggregate have no
Material Adverse Effect. Proper and accurate amounts have been withheld by the
Borrower and each of its respective Tax Affiliates from their respective
employees for all periods in full and complete compliance with the tax, social
security and unemployment withholding provisions of applicable federal, state,
local and foreign law and such withholdings have been timely paid to the
respective Governmental Authorities. None of the Borrower or any of its Tax
Affiliates has (i) executed or filed with the IRS any agreement or other
document extending, or having the effect of extending, the period for assessment
or collection of any charges; (ii) agreed or been requested to make any
adjustment under Section 481(a) of the Code by reason of a change in accounting
method or otherwise; or (iii) any obligation under any written tax sharing
agreement.
4.4. Full Disclosure. No written statement prepared or furnished by or
on behalf of any Loan Party or any of its Affiliates in connection with any of
the Loan Documents or the consummation of the transactions contemplated thereby,
and no financial statement delivered pursuant hereto or thereto, contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained herein or therein not misleading.
4.5. Financial Matters. (a) The consolidated balance sheet of the
Borrower and its Subsidiaries as at December 31, 1997, and the related
consolidated statements of income, retained earnings and cash flows of the
Borrower and its Subsidiaries for the fiscal year then ended, audited by Coopers
& Lybrand, L.L.P. and the consolidated balance sheets of the Borrower and its
Subsidiaries as at December 31, 1997, and the related consolidated statements of
income, retained earnings and cash flows of the Borrower and its Subsidiaries
for the twelve months then ended, certified by the chief financial officer of
the Borrower, copies of which have been furnished to each Lender, fairly
present, subject, in the case of said balance sheets as at December 31, 1997,
and said statements of income, retained earnings and cash flows for the twelve
months then ended, to year-end audit
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adjustments, the consolidated financial condition of the Borrower and its
Subsidiaries as at such dates and the consolidated results of the operations of
the Borrower and its Subsidiaries for the period ended on such dates, all in
conformity with GAAP.
(b) Since December 31, 1997, there has been no Material Adverse Change
and there have been no events or developments that in the aggregate have had a
Material Adverse Effect.
(c) Neither the Borrower nor any of its Subsidiaries had at December
31, 1997 any material obligation, contingent liability or liability for taxes,
long-term leases or unusual forward or long-term commitment which is not
reflected in the balance sheet at such date referred to in subsection (a) above
or in the notes thereto.
(d) The Projections that have been delivered to each Lender, were
prepared on the basis of the assumptions expressed therein, which assumptions
the Borrower believed to be reasonable based on the information available to the
Borrower at the time so furnished and on the Closing Date.
(e) The Borrower is, and on a consolidated basis the Borrower and its
Subsidiaries are, Solvent.
4.6. Litigation. There are no pending or, to the knowledge of the
Borrower, threatened actions, investigations or proceedings affecting the
Borrower, any of its Subsidiaries or Eligible Joint Ventures, or (to the best
knowledge of the Borrower) any Operating Lessee or any of their respective
properties or revenues before any court, Governmental Authority or arbitrator,
other than those that in the aggregate, if adversely determined, would have no
Material Adverse Effect. The performance of any action by (a) any Loan Party
required or contemplated by any of the Loan Documents or (b) any Operator
required or contemplated by any Operating Lease or Management Agreement is not,
to the best knowledge of the Borrower, restrained or enjoined (either
temporarily, preliminarily or permanently), and, to the best knowledge of the
Borrower, no material adverse condition has been imposed by any Governmental
Authority or arbitrator upon any of the foregoing transactions contemplated by
the aforementioned documents.
4.7. Margin Regulations. The Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U issued by the Board of Governors of the Federal
Reserve System), and no proceeds of any Borrowing will be used to purchase or
carry any
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margin stock or to extend credit to others for the purpose of purchasing or
carrying any margin stock.
4.8. Ownership of Borrower and DJONT; Subsidiaries. (a) The authorized
capital stock of FelCor consists of (i) as of the date hereof 100,000,000 shares
of common stock, $.01 par value per share, of which 36,591,080 shares are issued
and outstanding as of the date hereof, and (ii) as of the date hereof 10,000,000
shares of preferred stock, $.01 par value per share, of which 6,050,000 shares,
designated as $1.95 Series A Cumulative Convertible Preferred Stock, $25.00 per
share liquidation preference, and 57,500 shares designated as 9% Series B
Cumulative Redeemable Preferred Stock, $2,500.00 per share liquidation
preference (and represented by 5,750,000 Depository Shares, each representing a
1/100 interest in such preferred stock) are outstanding as of the date hereof.
All of the outstanding capital stock of FelCor has been validly issued, is fully
paid and non-assessable.
(b) FelCor is the sole general partner of FelCor LP and, as of the date
hereof, owns beneficially and of record at least 92.7% of the partnership
interests of FelCor LP free and clear of all Liens.
(c) There are no outstanding classes of voting membership interests of
DJONT other than the Class A membership interests. As of the date hereof Hervey
A. Feldman and Thomas J. Corcoran, Jr. own, beneficially, all of the voting
Class A membership interests in DJONT, free and clear of all Liens.
(d) Set forth on Schedule 4.8 hereto is a complete and accurate list
showing, as of the Effective Date, all Subsidiaries and Unconsolidated Entities
of the Borrower and, as to each such Subsidiary and Unconsolidated Entity, the
jurisdiction of its formation and the percentage of the outstanding Stock of
each class owned (directly or indirectly) by the Borrower. No Stock of any
Subsidiary or Unconsolidated Entity of the Borrower is subject to any
outstanding option, warrant, right of conversion or purchase or any similar
right other than certain rights of first refusal contained in partnership
agreements to which the Borrower or a Subsidiary is a party. All of the
outstanding capital Stock of each such Subsidiary and Unconsolidated Entity
owned by the Borrower has been validly issued, is fully paid and (except for
partnership interests) non-assessable, and all outstanding capital Stock of its
Subsidiaries and Unconsolidated Entities owned by the Borrower is free and clear
of all Liens. Neither the Borrower nor any such Subsidiary or Unconsolidated
Entity is a party to, or has knowledge of, any agreement restricting the
transfer or hypothecation of any shares of Stock of any such Subsidiary or
Unconsolidated Entity, other than those imposed by Requirements of Law, or the
Loan Documents.
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4.9. ERISA. (a) There are no Multiemployer Plans.
(b) Each Plan and any related trust intended to qualify under Code
Section 401 or 501 has been determined by the IRS to be so qualified and to the
best knowledge of the Borrower nothing has occurred which would cause the loss
of such qualification.
(c) None of the Borrower, any of its Subsidiaries or any ERISA
Affiliate, with respect to any Pension Plan, has failed to make any contribution
or pay any amount due as required by Section 412 of the Code or Section 302 of
ERISA or the terms of any such plan, and all required contributions and benefits
have been paid in accordance with the provisions of each such plan.
(d) There are no pending or, to the knowledge of the Borrower,
threatened claims, actions or proceedings (other than claims for benefits in the
normal course), relating to any Plan other than those that in the aggregate, if
adversely determined, would have no Material Adverse Effect.
(e) No Pension Plan has any unfunded accrued benefit liabilities, as
determined by using reasonable actuarial assumptions utilized by such plan's
actuary for funding purposes. Within the last five years none of the Borrower,
any of its Subsidiaries or any ERISA Affiliate has caused a Pension Plan with
any such liabilities to be transferred outside of its "controlled group" (within
the meaning of Section 4001(a)(14) of ERISA).
(f) No Plan provides for continuing health, disability, accident or
death benefits or coverage for any participant or his or her beneficiary after
such participant's termination of employment (except as may be required by
Section 4980B of the Code and at the sole expense of the participant or the
beneficiary) which would result in the aggregate under all Plans in a liability
in an amount which would have a Material Adverse Effect.
(g) None of the assets of any of the Loan Parties are subject to Title
I of ERISA because they consist of "plan assets" within the meaning of DOL
Regulation Section 2510.3-101 by reason of an equity investment in any of the
Loan Parties.
4.10. Indebtedness. Except as disclosed on Schedule 4.10, as of the
date hereof, none of the Borrower or any of its Subsidiaries or Unconsolidated
Entities has any Indebtedness.
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4.11. Restricted Payments. From and after the Closing Date, the
Borrower has not declared or made any Restricted Payments (other than those
permitted pursuant to Section 7.4).
4.12. No Burdensome Restrictions; No Defaults. (a) No Loan Party nor
any of its Subsidiaries or Eligible Joint Ventures (i) is a party to any
Contractual Obligation the compliance with which would have a Material Adverse
Effect or the performance of which by any thereof, either unconditionally or
upon the happening of an event, will result in the creation of a Lien on the
property or assets of any such Loan Party or its Subsidiaries, or (ii) is
subject to any charter or corporate restriction which has a Material Adverse
Effect.
(b) No Loan Party or Subsidiary or Eligible Joint Venture of any Loan
Party is in default under or with respect to any Contractual Obligation owed by
it and, to the knowledge of the Borrower, no other party is in default under or
with respect to any Contractual Obligation owed to any Loan Party or to any
Subsidiary or Eligible Joint Venture of a Loan Party, other than those defaults
which in the aggregate have no Material Adverse Effect.
(c) No Event of Default or Default has occurred and is continuing.
(d) There is no Requirement of Law the compliance with which by any
Loan Party would have a Material Adverse Effect.
(e) As of the date hereof, no Subsidiary or Eligible Joint Venture of
the Borrower is subject to any Contractual Obligation (other than as set forth
in the governing documents thereof) restricting or limiting its ability to
transfer its assets to the Borrower or to declare or make any dividend payment
or other distribution on account of any shares of any class of its Stock or its
ability to purchase, redeem, or otherwise acquire for value or make any payment
in respect of any such shares or any shareholder rights.
4.13. Investments. Except as disclosed on Schedule 4.8 or 4.13, the
Borrower and its Subsidiaries considered as a single enterprise, is not engaged
in any joint venture or partnership with any other Person nor does it maintain
any Investment, as of the date hereof.
4.14. Government Regulation. Neither the Borrower nor any of its
Subsidiaries or Eligible Joint Ventures is an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company",
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as such terms are defined in the Investment Company Act of 1940, as amended, or
subject to regulation under the Public Utility Holding Company Act
of 1935, the Federal Power Act, the Interstate Commerce Act, or any other
federal or state statute or regulation such that its ability to incur
Indebtedness is limited, or its ability to consummate the transactions
contemplated hereby or by any other Loan Document, or the exercise by the
Administrative Agent or any Lender of rights and remedies hereunder or
thereunder, is impaired. The making of the Loans by the Lenders, the application
of the proceeds and repayment thereof by the Borrower and the consummation of
the transactions contemplated by the Loan Documents will not cause the Borrower
or any of its Subsidiaries or Eligible Joint Ventures to violate any provision
of any of the foregoing or any rule, regulation or order issued by the
Securities and Exchange Commission thereunder.
4.15. Insurance. All policies of insurance of any kind or nature owned
by or issued to or for the benefit of any Loan Party or any of its Subsidiaries
or Eligible Joint Ventures, or issued in respect of any real property owned or
leased by the Borrower or any of its Subsidiaries or Eligible Joint Ventures
including, without limitation, policies of life, fire, theft, product liability,
public liability, property damage, other casualty, employee fidelity, workers'
compensation and employee health and welfare insurance, are in full force and
effect and are of a nature and provide such coverage as is sufficient and as is
customarily carried by companies of the size and character of such Person. No
Loan Party or any of its Subsidiaries or Eligible Joint Ventures has been
refused insurance for which it applied or had any policy of insurance terminated
(other than at its request).
4.16. Labor Matters. (a) There are no strikes, work stoppages,
slowdowns or lockouts pending or threatened against or involving the Borrower or
its Subsidiaries or their respective Hotels, other than those which in the
aggregate have no Material Adverse Effect.
(b) There are no unfair labor practice charges, arbitrations or
grievances pending against or involving, or to the knowledge of the Borrower
threatened against or involving the Borrower or its Subsidiaries or Eligible
Joint Ventures, other than those which, in the aggregate, if resolved adversely
to the Borrower or such Subsidiary or Eligible Joint Venture, would have no
Material Adverse Effect.
(c) As of the Effective Date, neither the Borrower nor any of its
Subsidiaries or Eligible Joint Ventures are parties to, or have any obligations
under, any collective bargaining agreement.
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(d) There is no organizing activity involving the Borrower or any of
its Subsidiaries or Eligible Joint Ventures pending or, to the Borrower's
knowledge, threatened by any labor union or group of employees, other than those
which in the aggregate have no Material Adverse Effect. There are no
representation proceedings pending or, to the Borrower's knowledge, threatened
with the National Labor Relations Board, and no labor organization or group of
employees of the Borrower or any of its Subsidiaries or Eligible Joint Ventures
have made a pending demand for recognition, other than those which in the
aggregate have no Material Adverse Effect.
4.17. Force Majeure. Neither the business nor the properties of any
Loan Party or any of their respective Subsidiaries or Eligible Joint Ventures
are currently suffering from the effects of any fire, explosion, accident,
strike, lockout or other labor dispute, drought, storm, hail, earthquake,
embargo, act of God or of the public enemy or other casualty (whether or not
covered by insurance), other than those which in the aggregate have no Material
Adverse Effect.
4.18. Use of Proceeds. The proceeds of the Loans will be used by the
Borrower solely as follows: (a) subject to the limitations set forth herein, to
fund any direct or indirect investment in existing Hotels, in Hotels and/or
interests in Hotels which are to be acquired by the Borrower or any of its
Subsidiaries, and for the payment of related transaction costs, fees and
expenses, (b) for general corporate or working capital purposes or for Letters
of Credit and (c) for repayment of indebtedness assumed by Borrower from Bristol
in connection with the Bristol Merger.
4.19. Environmental Protection. Except as disclosed on Schedule 4.19
(and the Borrower represents and warrants to the Lenders and the Administrative
Agent that the matters disclosed in the reports identified on Schedule 4.19
would not reasonably be expected to have a Material Adverse Effect):
(a) to the best knowledge of Borrower and its Subsidiaries, all real
property leased or owned by the Borrower or any of its Subsidiaries or Eligible
Joint Ventures is free from contamination by any Hazardous Material which could
reasonably be expected to subject the Borrower or any of its Subsidiaries to
Environmental Liabilities and Costs of $5,000,000 or more;
(b) the operations of the Borrower and each of its Subsidiaries or
Eligible Joint Ventures, and the operations at any real property leased or owned
by the Borrower or any of its Subsidiaries or Eligible Joint Ventures are in
material compliance in all respects with all applicable Environmental Laws;
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(c) neither the Borrower nor any of its Subsidiaries or Eligible Joint
Ventures have liabilities with respect to Hazardous Materials and, to the best
knowledge of the Borrower and its Subsidiaries, no facts or circumstances exist
which could give rise to liabilities with respect to Hazardous Materials which
could reasonably be expected to subject the Borrower or any of its Subsidiaries
to Environmental Liabilities and Costs of $5,000,000 or more;
(d) (i) the Borrower and its Subsidiaries and Eligible Joint Ventures
and all real property owned or leased by the Borrower or its Subsidiaries and
Eligible Joint Ventures have all Environmental Permits necessary for the
operations at such real property and are in material compliance with such
Environmental Permits, (ii) there are no Legal Proceedings pending nor, to the
best knowledge of the Borrower and its Subsidiaries, threatened to revoke, or
alleging the violation of, such Environmental Permits, and (iii) neither the
Borrower nor any of its Subsidiaries or Eligible Joint Ventures or to the best
knowledge of the Borrower and its Subsidiaries the Operators have received any
notice from any source to the effect that there is lacking any Environmental
Permit required in connection with the current use or operation of any property
leased or owned by the Borrower or any of its Subsidiaries or Eligible Joint
Ventures;
(e) neither the Borrower's nor any of its Subsidiaries' or Eligible
Joint Ventures' current facilities and operations, nor, to the best knowledge of
the Borrower and its Subsidiaries, any Operator, any predecessor of the Borrower
or any of its Subsidiaries or Eligible Joint Ventures, nor any of the Borrower's
or its Subsidiaries' or Eligible Joint Ventures' past facilities and operations,
nor to the best knowledge of the Borrower and its Subsidiaries, any owner of
premises leased or operated by the Borrower and its Subsidiaries and Eligible
Joint Ventures, are subject to any outstanding written Order or Contractual
Obligation, including Environmental Liens, with any Governmental Authority or
other Person, or to any federal, state, local, foreign or territorial
investigation respecting (i) Environmental Laws, (ii) Remedial Action, (iii) any
Environmental Claim, or (iv) the Release or threatened Release of any Hazardous
Material;
(f) neither the Borrower nor any of its Subsidiaries or Eligible Joint
Ventures or, to the best knowledge of the Borrower and its Subsidiaries,
Operators are subject to any pending Legal Proceeding alleging the violation of
any Environmental Law with respect to a Hotel nor, to the best knowledge of the
Borrower and its Subsidiaries, are any such proceedings threatened;
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(g) neither the Borrower nor any of its Subsidiaries or Eligible Joint
Ventures nor, to the best knowledge of the Borrower and its Subsidiaries, any
Operators or predecessor of the Borrower or any of its Subsidiaries or Eligible
Joint Ventures, nor to the best knowledge of the Borrower and its Subsidiaries
any owner of premises leased by the Borrower or any of its Subsidiaries or
Eligible Joint Ventures, have filed any notice under federal, state or local,
territorial or foreign law indicating past or present treatment, storage, or
disposal of or reporting a Release of Hazardous Material into the environment;
(h) none of the operations of the Borrower or any of its Subsidiaries
or Eligible Joint Ventures or, to the best knowledge of the Borrower and its
Subsidiaries, of any Operators or predecessor of the Borrower or any of its
Subsidiaries or Eligible Joint Ventures, or, to the best knowledge of the
Borrower and its Subsidiaries, of any owner of premises leased by the Borrower
or any of its Subsidiaries or Eligible Joint Ventures, involve or previously
involved the generation, transportation, treatment, storage or disposal of
hazardous waste, as defined under 40 C.F.R. Part 261.3 (in effect as of the date
of this Agreement) or any state, local, territorial or foreign equivalent; and
(i) there is not now, nor to the best knowledge of the Borrower and its
Subsidiaries, has there been in the past, on, in or under any real property
leased or owned by the Borrower or any of its Subsidiaries or Eligible Joint
Ventures, to the best knowledge of the Borrower and its Subsidiaries or any of
their predecessors (i) any underground storage tanks or surface tanks, dikes or
impoundments (other than for surface water), (ii) any friable
asbestos-containing materials, (iii) any polychlorinated biphenyls, or (iv) any
radioactive substances other than naturally-occurring radioactive material.
4.20. Contractual Obligations Concerning Assets. As of the date hereof,
neither the Borrower nor any of its Subsidiaries owns or holds, or is obligated
under or a party to, any option, right of first refusal, or other contractual
right to purchase or acquire (other than pursuant to the Bristol Merger), or any
Contractual Obligation to effect an Asset Sale of, any Hotel owned or leased by
the Borrower or any of its Subsidiaries, except those that in the aggregate
would not have a Material Adverse Effect whether or not exercised.
4.21. Intellectual Property. The Loan Parties and its Subsidiaries and
Eligible Joint Ventures or the Operating Lessee own or license or otherwise have
the right to use all material licenses, permits, patents, patent applications,
trademarks, trademark applications, service marks, trade names, copyrights,
copyright
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applications, franchises, authorizations and other intellectual property rights
that are necessary for the operations of their respective businesses, without
infringement upon or conflict with the rights of any other Person with respect
thereto, including, without limitation, the Licenses and all trade names
associated with any private label brands of any Loan Party or any of its
Subsidiaries or Eligible Joint Ventures. To the best knowledge of the Borrower,
no material slogan or other advertising device, product, process, method,
substance, part or component, or other material now employed, or now
contemplated to be employed, by any Loan Party or any of their respective
Subsidiaries or Eligible Joint Ventures or the Operating Lessee infringes upon
or conflicts with any rights owned by any other Person, and no claim or
litigation regarding any of the foregoing is pending or threatened.
4.22. Title. (a) Each Loan Party and their respective Subsidiaries and
Eligible Joint Ventures own good and marketable fee simple absolute title to all
of the Real Estate purported to be owned by them, which Real Estate is at the
date hereof described in Schedule 4.22(a), and good and marketable title to, or
valid leasehold interests in, all other properties and assets purported to be
leased by any Loan Party or any of their respective Subsidiaries or Eligible
Joint Ventures, including, without limitation, valid leasehold interests
pursuant to the Leases and all property reflected in the balance sheet referred
to in Section 4.5(a). Each Loan Party and its respective Subsidiaries or
Eligible Joint Ventures received all deeds, assignments, waivers, consents,
non-disturbance and recognition or similar agreements, bills of sale and other
documents, and have duly effected all recordings, filings and other actions
necessary to establish, protect and perfect such Loan Party's and their
respective Subsidiaries' or Eligible Joint Ventures' right, title and interest
in and to all such property except for such documents or actions the failure to
obtain or accomplish which would not have a Material Adverse Effect.
(b) All material real property leased at the date hereof by the
Borrower or any of their respective Subsidiaries or Eligible Joint Ventures is
listed on Schedule 4.22(b). Each of such leases is valid and enforceable in
accordance with its terms and is in full force and effect. The Borrower has
delivered to the Administrative Agent true and complete copies of each of such
leases and all documents affecting the rights or obligations of the Borrower or
any of its Subsidiaries or Eligible Joint Ventures which is a party thereto,
including, without limitation, any non-disturbance and recognition agreements,
subordination agreements, attornment agreements and agreements regarding the
term or rental of any of the leases. None of the Borrower or any of its
respective Subsidiaries or Eligible Joint Ventures nor, to the knowledge of the
Borrower, any other party to any such lease is in default of its obligations
thereunder or has delivered or received any notice of
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default under any such lease, nor has any event occurred which, with the giving
of notice, the passage of time or both, would constitute a default under any
such lease, except for defaults which in the aggregate have no Material Adverse
Effect.
(c) All components of all improvements included within the Hotels owned
or leased, as lessee, by any Loan Party or Eligible Joint Venture (collectively,
"Improvements"), including, without limitation, the roofs and structural
elements thereof and the heating, ventilation, air conditioning, plumbing,
electrical, mechanical, sewer, waste water, storm water, paving and parking
equipment, systems and facilities included therein, are in good working order
and repair, subject to such exceptions which are not reasonably likely to have,
in the aggregate, a Material Adverse Effect. All water, gas, electrical, steam,
compressed air, telecommunication, sanitary and storm sewage lines and systems
and other similar systems serving the Hotels owned or leased by any Loan Party
or any of their respective Subsidiaries or Eligible Joint Ventures are installed
and operating and are sufficient to enable the real property owned or leased by
any Loan Party and their respective Subsidiaries or Eligible Joint Ventures to
continue to be used and operated in the manner currently being used and
operated, and no Loan Party or any of its Subsidiaries or Eligible Joint
Ventures has any knowledge of any factor or condition that reasonably could be
expected to result in the termination or material impairment of the furnishing
thereof. No Improvement or portion thereof is dependent for its access,
operation or utility on any land, building or other Improvement not included in
the real property owned or leased by any Loan Party or any of its Subsidiaries
or Eligible Joint Ventures other than for access provided pursuant to a recorded
easement or other right of way establishing the right of such access.
(d) All Permits required to have been issued or appropriate to enable
all real property owned or leased by any Loan Party or any of its Subsidiaries
or Eligible Joint Ventures to be lawfully occupied and used for all of the
purposes for which they are currently occupied and used have been lawfully
issued and are in full force and effect, other than those which in the aggregate
have no Material Adverse Effect.
(e) No Loan Party or any of its Subsidiaries or Eligible Joint Ventures
has received any notice, or has any knowledge, of any pending, threatened or
contemplated condemnation proceeding affecting any real property owned or leased
by any Loan Party or any of its Subsidiaries or Eligible Joint Ventures or
any part thereof, or any proposed termination or impairment of any parking at
any such owned or leased real property or of any sale or other disposition of
any real property owned or leased by any Loan Party or any of its Subsidiaries
or Eligible Joint Ventures or
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any part thereof in lieu of condemnation, which in the aggregate, are reasonably
likely to have a Material Adverse Effect.
(f) Except for events or conditions not reasonably likely to have, in
the aggregate, a Material Adverse Effect, (i) no portion of any real property
owned or leased by any Loan Party or any of its Subsidiaries or Eligible Joint
Ventures has suffered any material damage by fire or other casualty loss which
has not heretofore been completely repaired and restored to its condition prior
to such casualty, and (ii) no portion of any real property owned or leased by
any Loan Party or any of its Subsidiaries or Eligible Joint Ventures is located
in a special flood hazard area as designated by any Federal Governmental
Authorities.
4.23. Status as REIT. The Borrower is organized in conformity with the
requirements for qualification as an equity-oriented real estate investment
trust under the Code. Borrower has met all of the requirements for qualification
as an equity-oriented real estate investment trust under the Code for its Fiscal
Year ended December 31, 1997. The Borrower is in a position to qualify for its
current Fiscal Year as a real estate investment trust under the Code and its
proposed methods of operation will enable it to so qualify.
4.24. Operator: Compliance with Law. To the best knowledge of the
Borrower and its Subsidiaries, each Operator (i) has full power and authority
and the legal right to own, lease (or sublease), manage and operate (as
applicable) the properties it operates and to conduct the business in which it
is currently engaged with respect to any real property owned or leased by the
Borrower or any of its Subsidiaries or Eligible Joint Ventures, (ii) is duly
qualified or licensed and is in good standing under the laws of each
jurisdiction where its ownership, lease (or sublease), management or operation
of any real property owned or leased by the Borrower or any of its Subsidiaries
or Eligible Joint Ventures requires such qualification, and (iii) is in
compliance with all Requirements of Law applicable to the real property owned or
leased by the Borrower or any of its Subsidiaries or Eligible Joint Ventures, or
applicable to the operation or management thereof except to the extent that the
failure to comply therewith is not reasonably likely to have, in the aggregate,
a Material Adverse Effect.
4.25. Operating Leases, Licenses and Management Agreement. (a) Each of
the Hotels (i) is leased to an Operating Lessee under an Operating Lease (ii) is
the subject of a License, and (iii) is managed and operated for the Operating
Lessee pursuant to a Management Agreement.
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(b) Each of the Operating Leases, Licenses and Management Agreements in
respect of the Hotels (i) is in full force and effect, (ii) is a legally valid
and binding obligation of each of the parties thereto, subject to such
exceptions which are not reasonably likely to have, in the aggregate, a Material
Adverse Effect, and (iii) has not been modified, amended or supplemented in any
material or adverse way. Neither the Borrower nor any of its Subsidiaries or
Eligible Joint Ventures has collected any rents becoming due under any Operating
Lease more than 30 days in advance. All rent and other sums and charges payable
by any Operating Lessee under each Operating Lease to which it is a party are
current, no notice of default or termination under any such Operating Lease is
outstanding, no termination event or condition or uncured default on the part of
the Operating Lessee exists under any Operating Lease, and no event of default
has occurred which, with the giving of notice or the lapse of time or both,
would constitute such a default or termination event or condition or uncured
default on the part of the Borrower or its Subsidiaries or Eligible Joint
Ventures or the Operators (as the case may be), subject to such exceptions which
are not reasonably likely to have, in the aggregate, a Material Adverse Effect.
As to all of the Leases, Borrower and each of its Subsidiaries or Eligible Joint
Ventures has performed all of its repair and maintenance obligations (if any)
and, to the best knowledge and belief of Borrower, each Operating Lessee under
each Operating Lease to which it is a party has performed all of its repair and
maintenance obligations, subject to such exceptions which are not reasonably
likely to have, in the aggregate, a Material Adverse Effect.
4.26. FF&E Reserves. An FF&E Reserve has been established in respect of
each of the Hotels and the Borrower or its Subsidiaries or Eligible Joint
Ventures have made any contributions to such FF&E Reserve as required by the
terms of the Operating Lease and/or the Management Agreement relating thereto.
4.27 Year 2000 Compliance. Any reprogramming required to permit the
proper functioning, in and following the year 2000, of (i) the Borrower's
computer systems and (ii) equipment containing embedded microchips (including
systems and equipment supplied by others or with which Borrower's systems
interface) and the testing of all such systems and equipment, as so
reprogrammed, will be completed by January 1, 1999. The cost to the Borrower of
such reprogramming and testing and of the reasonably foreseeable consequences of
year 2000 to the Borrower (including, without limitation, reprogramming errors
and the failure of others' systems or equipment) will not result in a Default or
a Material Adverse Effect. Except for such of the reprogramming referred to in
the preceding sentence as may be necessary, the computer and management
information systems of the Borrower and its Subsidiaries are and, with ordinary
course upgrading and
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maintenance, will continue for the term of this Agreement to be, sufficient to
permit the Borrower to conduct its business without the occurrence of a Material
Adverse Effect.
ARTICLE V
FINANCIAL COVENANTS
As long as any of the Obligations or Commitments remain outstanding,
unless the requisite Lenders specified in Section 10.1 otherwise consent in
writing, the Borrower agrees with the Lenders and the Administrative Agent that:
5.1. Unsecured Interest Expense Coverage. The Borrower shall maintain
at the end of each Fiscal Quarter, commencing with the Fiscal Quarter ending on
March 31, 1998, a ratio of (a) Unencumbered NOI to (b) Unsecured Interest
Expense, in each case determined on the basis of the four (4) Fiscal Quarters
ending on the date of determination, of not less than 2.5:1.0.
5.2. Fixed Charge Coverage Ratio. The Borrower shall maintain at the
end of each Fiscal Quarter commencing with the Fiscal Quarter ending on March
31, 1998, a ratio of (a) Adjusted EBITDA to (b) Fixed Charges, in each case
determined on the basis of the four (4) Fiscal Quarters ending on the date of
determination, of not less than 2.0:1.0.
5.3. Maintenance of Tangible Net Worth. The Borrower shall maintain
during each Fiscal Quarter a Tangible Net Worth of not less than the Minimum
Tangible Net Worth.
5.4. Limitations on Total Indebtedness. The Borrower shall not, during
each Fiscal Quarter on a consolidated basis, permit the Total Indebtedness
(including, without limitation, the Obligations and all Capitalized Lease
Obligations) of the Borrower for borrowed money to exceed 50% of Total Value.
5.5. Limitations on Total Secured Indebtedness. The Borrower shall not,
during each Fiscal Quarter on a consolidated basis, permit the Total Secured
Indebtedness (including, without limitation, secured Obligations and Capitalized
Lease Obligations) of the Borrower, to exceed (x) prior to and including June
30, 1999, 30% of Total Value and (y) after June 30, 1999, 25% of Total Value.
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5.6. Adjusted NOI and Hotels. The Borrower shall ensure that at the end
of each Fiscal Quarter commencing with the Fiscal Quarter ending on June 30,
1997 at least 50% of the aggregate Adjusted NOI generated by all Hotels during
the preceding four (4) Fiscal Quarters shall be generated by Hotels wholly owned
or leased by the Borrower or its wholly-owned Subsidiaries, provided that, for
Hotels owned or leased for less than four (4) Fiscal Quarters only the Adjusted
NOI generated by such Hotels since the date of acquisition of such Hotel shall
be included in calculating such aggregate Adjusted NOI.
5.7. Limitations on Recourse Secured Indebtedness. The Borrower shall
not, during each Fiscal Quarter on a consolidated basis, permit the Recourse
Secured Indebtedness (including, without limitation, secured Obligations and
Capitalized Lease Obligations) of the Borrower, to exceed the lesser of (x) 7.5%
of Total Value and (y) $200,000,000.00.
ARTICLE VI
AFFIRMATIVE COVENANTS
As long as any of the Obligations or the Commitments remain
outstanding, unless the Majority Lenders otherwise consent in writing, the
Borrower agrees with the Lenders and the Administrative Agent that:
6.1. Compliance with Laws, Etc. The Borrower shall comply, and shall
cause each of its Subsidiaries and Eligible Joint Ventures to comply, in all
material respects with all Requirements of Law, Contractual Obligations,
commitments, instruments, licenses, permits and franchises, including, without
limitation, all Permits; provided, however, that the Borrower shall not be
deemed in default of this Section 6.1 if all such non-compliances in the
aggregate have no Material Adverse Effect.
6.2. Conduct of Business. The Borrower shall (a) conduct, and shall
cause each of its Subsidiaries and Eligible Joint Ventures to conduct, its
business in the ordinary course and consistent with past practice; (b) use, and
cause each of its Subsidiaries and Eligible Joint Ventures to use, its
reasonable efforts, in the ordinary course and consistent with past practice, to
(i) preserve its business and the goodwill and business of the customers,
advertisers, suppliers and others having business relations with the Borrower or
any of its Subsidiaries or Eligible Joint Ventures, and (ii) keep available the
services and goodwill of its present employees; (c) preserve, and cause each of
its Subsidiaries and Eligible Joint Ventures to preserve, all
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registered patents, trademarks, trade names, copyrights and service marks with
respect to its business; and (d) perform and observe, and cause each of its
Subsidiaries and Eligible Joint Ventures to perform and observe, all the terms,
covenants and conditions required to be performed and observed by it under its
Contractual Obligations (including, without limitation, to pay all rent and
other charges payable under any lease and all debts and other obligations as the
same become due), and do, and cause its Subsidiaries and Eligible Joint Ventures
to do, all things necessary to preserve and to keep unimpaired its rights under
such Contractual Obligations; provided, however, that, in the case of each of
clauses (a) through (d), the Borrower shall not be deemed in default of this
Section 6.2 if all such failures in the aggregate have no Material Adverse
Effect.
6.3. Payment of Taxes, Etc. The Borrower shall pay and discharge, and
shall cause each of its Subsidiaries and Eligible Joint Ventures, as
appropriate, to pay and discharge, before the same shall become delinquent, all
lawful governmental claims, taxes, assessments, charges and levies, except where
contested in good faith, by proper proceedings, if adequate reserves therefor
have been established on the books of the Borrower or the appropriate Subsidiary
or Eligible Joint Venture in conformity with GAAP; provided, however, that the
Borrower shall not be deemed in default of this Section 6.3 if all such
non-payments in the aggregate have no Material Adverse Effect.
6.4. Maintenance of Insurance. The Borrower shall maintain, and shall
cause each of its Subsidiaries and Eligible Joint Ventures to maintain,
insurance with responsible and reputable insurance companies or associations in
such amounts and covering such risks (including, without limitation, fire,
extended coverage, vandalism, malicious mischief, public liability, product
liability, and business interruption) as is usually carried by companies engaged
in similar businesses and owning similar properties in the same general areas in
which the Borrower or such Subsidiary or Eligible Joint Venture. The Borrower
will furnish to the Lenders from time to time such information as may be
requested as to such insurance.
6.5. Preservation of Existence, Etc. The Borrower shall preserve and
maintain, and shall cause each of its Subsidiaries and Eligible Joint Ventures
to preserve and maintain, its corporate or partnership existence, rights
(charter and statutory) and franchises, except as permitted under Section 7.5.
6.6. Access. The Borrower shall, at any reasonable time and from time
to time, permit the Administrative Agent or any of the Lenders, or any agents or
representatives thereof, at the expense of the Lenders (but such expense to be
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reimbursed by the Borrower in the event that any of the following reveal a
material Default by the Borrower), to (a) examine and make copies of and
abstracts from the records and books of account of the Borrower and each of its
Subsidiaries and Eligible Joint Ventures, (b) visit the properties of the
Borrower and each of its Subsidiaries and Eligible Joint Ventures, (c) discuss
the affairs, finances and accounts of the Borrower and each of its Subsidiaries
and Eligible Joint Ventures with any of their respective officers or directors,
and (d) communicate directly with the Borrower's independent certified public
accountants.
6.7. Keeping of Books. The Borrower shall keep, and shall cause each of
its Subsidiaries and Eligible Joint Ventures to keep, proper books of record and
account, in which proper entries shall be made of all financial transactions and
the assets and business of the Borrower and each such Subsidiary or Eligible
Joint Venture.
6.8. Maintenance of Properties, Etc. The Borrower shall maintain and
preserve, and shall cause each of its Subsidiaries and Eligible Joint Ventures
to maintain and preserve, (i) all of its properties which are used or useful or
necessary in the conduct of its business in good working order and condition,
and (ii) all rights, permits, licenses, approvals and privileges (including,
without limitation, all Permits) which are used or useful or necessary in the
conduct of its business; provided, however, that the Borrower shall not be
deemed in default of this Section 6.8 if all such failures in the aggregate have
no Material Adverse Effect.
6.9. Performance and Compliance with Other Covenants. The Borrower
shall perform and comply with, and shall cause each of its Subsidiaries and
Eligible Joint Ventures to perform and comply with, each of the covenants and
agreements set forth in each Contractual Obligation to which it or any of its
Subsidiaries or Eligible Joint Ventures is a party; provided, however, that the
Borrower shall not be deemed in default of this Section 6.9 if all such failures
in the aggregate have no Material Adverse Effect.
6.10. Application of Proceeds. The Borrower shall use the entire amount
of the proceeds of the Loans as provided in Section 4.18.
6.11. Financial Statements. The Borrower shall furnish to the Lenders:
(a) as soon as available and in any event within 45 days after the end
of each of the first three Fiscal Quarters of each Fiscal Year, consolidated
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balance sheets of the Borrower and its Subsidiaries and the Reporting Operating
Lessees and any Requested Operating Lessee as of the end of such quarter and
consolidated statements of income, retained earnings and cash flow of the
Borrower and its Subsidiaries and the Reporting Operating Lessees and any
Requested Operating Lessee for the period commencing at the end of the previous
Fiscal Year and ending with the end of such Fiscal Quarter, all prepared in
conformity with GAAP and certified by the chief financial officer of the
Borrower or the chief financial officer of the Reporting Operating Lessees or a
Requested Operating Lessee, as appropriate, as fairly presenting the financial
condition and results of operations of the Borrower and its Subsidiaries and the
Reporting Operating Lessees and any Requested Operating Lessee at such date and
for such period, together with (i) a certificate of said officer stating that no
Default or Event of Default has occurred and is continuing or, if a Default or
an Event of Default has occurred and is continuing, a statement as to the nature
thereof and the action which the Borrower, any Reporting Operating Lessees or
any Requested Operating Lessee, as appropriate, proposes to take with respect
thereto, (ii) a schedule in form satisfactory to the Administrative Agent of the
computations used by the Borrower or any Reporting Operating Lessee or any
Requested Operating Lessee, as appropriate, in determining compliance with all
financial covenants contained herein, and (iii) a written discussion and
analysis by the management of the Borrower or any Reporting Operating Lessee or
any Requested Operating Lessee, as appropriate, of the financial statements
furnished in respect of such Fiscal Quarter;
(b) as soon as available and in any event within 90 days after the end
of each Fiscal Year, consolidated balance sheets of the Borrower and its
Subsidiaries and the Reporting Operating Lessees as of the end of such year and
consolidated statements of income, retained earnings and cash flow of the
Borrower and its Subsidiaries and the Reporting Operating Lessees for such
Fiscal Year, all prepared in conformity with GAAP and certified, in the case of
such consolidated financial statements, in a manner reasonably acceptable to the
Administrative Agent without qualification as to the scope of the audit by
Coopers & Lybrand or other independent public accountants of recognized national
standing together with (i) a schedule in form satisfactory to the Administrative
Agent of the computations used by the Borrower in determining, as of the end of
such Fiscal Year, the Borrower's or a Reporting Operating Lessee's, as
appropriate, compliance with all financial covenants contained herein, and (ii)
a written discussion and analysis by the management of the Borrower or any
Reporting Operating Lessee, as appropriate, of the financial statements
furnished in respect of such Fiscal Year; and
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(c) promptly after the same are received by the Borrower, a
copy of each management letter provided to the Borrower by its independent
certified public accountants which refers in whole or in part to any inadequacy,
defect, problem, qualification or other lack of fully satisfactory accounting
controls utilized by the Borrower or any of its Subsidiaries.
(d) within 45 days after the end of each Fiscal Quarter, a Compliance
Certificate as of the end of such Fiscal Quarter, executed by the Chief
Financial Officer of the Borrower and if requested by the Administrative Agent,
together with copies (to the extent not already delivered) of the Hotel
Documents in respect of each Hotel indicated by Administrative Agent.
6.12. Reporting Requirements. The Borrower shall furnish to the
Lenders:
(a) prior to any Asset Sale generating proceeds in excess of 10% of the
Total Value of the Borrower, a notice (i) describing the assets being sold, (ii)
stating the estimated Asset Sales proceeds in respect of such Asset Sale and
(iii) accompanied by a Compliance Certificate and a certificate of the Chief
Financial Officer of the Borrower stating that before and after giving effect to
such Asset Sale, the Borrower shall be in compliance with all of its covenants
set forth in the Loan Documents and that no Default or Event of Default will
result from such Asset Sale.
(b) as soon as available and in any event within 90 days after the end
of each Fiscal Year (or earlier if approved earlier by the Board of Directors of
the Borrower), an annual budget of the Borrower and its Subsidiaries for the
succeeding Fiscal Year, displaying on a quarterly basis anticipated balance
sheets, forecasted Capital Expenditures, working capital requirements, revenues,
net income, cash flow, EBITDA, all on a consolidated basis;
(c) promptly and in any event within 30 days after the Borrower, any of
its Subsidiaries or any ERISA Affiliate knows or has reason to know that any
ERISA Event has occurred, a written statement of the Chief Financial Officer or
other appropriate officer of the Borrower describing such ERISA Event or waiver
request and the action, if any, which the Borrower, its Subsidiaries and ERISA
Affiliates propose to take with respect thereto and a copy of any notice filed
by or with the PBGC or the IRS pertaining thereto;
(d) promptly and in any event within 10 days after receipt thereof, a
copy of any adverse notice, determination letter, ruling or opinion the
Borrower, any
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of its Subsidiaries or any ERISA Affiliate receives from the PBGC,
DOL or IRS with respect to any Plan, other than those which, in the aggregate,
do not have any reasonable likelihood of resulting in a Material Adverse Change;
(e) promptly after the commencement thereof, notice of all actions,
suits and proceedings before any domestic or foreign Governmental Authority or
arbitrator, affecting the Borrower or any of its Subsidiaries, except those
which in the aggregate, if adversely determined, would have no Material Adverse
Effect;
(f) promptly and in any event within two Business Days after the
Borrower becomes aware of the existence of (i) any Default or Event of Default,
(ii) any breach or non-performance of, or any default under, any Operating
Lease, Management Agreement or any Contractual Obligation which is material to
the business, prospects, operations or financial condition of the Borrower and
its Subsidiaries taken as one enterprise, or (iii) any Material Adverse Change
or any event, development or other circumstance which has any reasonable
likelihood of causing or resulting in a Material Adverse Change, telephonic or
telecopied notice in reasonable detail specifying the nature of the Default,
Event of Default, breach, non-performance, default, event, development or
circumstance, including, without limitation, the anticipated effect thereof,
which notice shall be promptly confirmed in writing within five days;
(g) promptly after the sending or filing thereof, copies of all reports
which the Borrower sends to its security holders generally, and copies of all
reports and registration statements which the Borrower or any of its
Subsidiaries files with the Securities and Exchange Commission or any national
securities exchange or the National Association of Securities Dealers, Inc.;
(h) promptly upon the request of any Lender, through the Administrative
Agent, copies of all federal tax returns and reports filed by the Borrower or
any of its Subsidiaries in respect of taxes measured by income (excluding sales,
use and like taxes);
(i) promptly and in any event within ten days of the Borrower or any
Subsidiary learning of any of the following, written notice to the
Administrative Agent of any of the following:
(i) the Release or threatened Release of any Hazardous Material on
or from any property owned or leased by the Borrower of any of its
Subsidiaries or Eligible Joint Ventures and any written order, notice,
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permit, application or other written communication or report received by
the Borrower, any of its Subsidiaries or Eligible Joint Ventures in
connection with or relating to any such Release or threatened Release,
unless such Release or threatened Release is not reasonably likely to
subject the Borrower or any of its Subsidiaries to Environmental
Liabilities and Costs of $5,000,000 or more;
(ii) any notice or claim to the effect that the Borrower, any of
its Subsidiaries or any Eligible Joint Ventures is or may be liable to
any Person as a result of the Release or threatened Release of any
Hazardous Material into the environment;
(iii) receipt by the Borrower, any of its Subsidiaries or Eligible
Joint Ventures or any Operator of notification that any real or personal
property of the Borrower or any of its Subsidiaries is subject to an
Environmental Lien;
(iv) any Remedial Action taken by the Borrower or any of its
Subsidiaries or Eligible Joint Ventures or any other Person on their
behalf in response to any Hazardous Material on, under or about any real
property owned or leased by the Borrower or any of its Subsidiaries or
Eligible Joint Ventures, unless such Remedial Action is not reasonably
likely to subject the Borrower or any of its Subsidiaries or Eligible
Joint Ventures to Environmental Liabilities and Costs of $5,000,000 or
more;
(v) receipt by the Borrower or any of its Subsidiaries or Eligible
Joint Ventures of any notice of violation of, or knowledge by the
Borrower or any of its Subsidiaries or any Eligible Joint Ventures that
there exists a condition which may result in a violation by the Borrower
or any of its Subsidiaries or Eligible Joint Ventures of, any
Environmental Law, unless such violation is not reasonably likely to
subject the Borrower or any of its Subsidiaries to Environmental
Liabilities and Costs of $5,000,000 or more;
(vi) any proposed Capital Expenditure by the Borrower or any of
its Subsidiaries or Eligible Joint Ventures intended or designed to
implement any existing or additional Remedial Action, unless such
expenditures are not reasonably likely to exceed $5,000,000;
(vii) the commencement of any judicial or administrative
proceeding or investigation alleging a violation of any Environmental
Law; or
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(viii) any proposed acquisition of stock, assets or real property,
or any proposed leasing of property by the Borrower, or any of its
Subsidiaries or Eligible Joint Ventures, unless such action is not
reasonably likely to subject the Borrower and its Subsidiaries to
Environmental Liabilities and Costs to the Borrower in excess of
$5,000,000;
(j) promptly, such additional financial and other information
respecting the financial or other condition of the Borrower or any of its
Subsidiaries or Eligible Joint Ventures or the Operating Lessee or the status or
condition of any real property owned or leased by the Borrower or its
Subsidiaries or Eligible Joint Ventures, or the operation thereof which the
Borrower is entitled to or can otherwise reasonably obtain, as the
Administrative Agent from time to time reasonably requests; and
(k) upon written request by any Lender through the Administrative
Agent, a report providing an update of the status of any Environmental Claim,
Remedial Action or any other issue identified in any notice or report required
pursuant to this Section 6.12.
6.13. Leases and Operating Leases; Management Agreements and Licenses.
(a) If requested by Administrative Agent, the Borrower shall provide the
Administrative Agent, within 30 days of such request, with a copy of each
Qualified Lease and each Operating Lease (to the extent not already delivered).
The Borrower shall, and shall cause each of its Subsidiaries and Eligible Joint
Ventures to, (i) comply in all material respects with all of their respective
obligations under all of their respective Leases and Operating Leases now or
hereafter held respectively by them with respect to real property, including,
without limitation, the Leases set forth in Schedule 4.22(b); (ii) not modify,
amend, cancel, extend or
otherwise change in any materially adverse manner any of the terms, covenants or
conditions of any such Leases or Operating Leases; (iii) not assign any Leases
or sublet any portion of the premises if such assignment or sublet would have a
Material Adverse Effect; (iv) provide the Administrative Agent with a copy of
each notice of default under any Lease or Operating Lease received by the
Borrower or any Subsidiary or Eligible Joint Venture of the Borrower immediately
upon receipt thereof and deliver to the Administrative Agent a copy of each
notice of default sent by the Borrower or any Subsidiary or Eligible Joint
Venture of the Borrower under any Lease or Operating Lease simultaneously with
its delivery of such notice under such Lease or Operating Lease except to the
extent that such defaults, in the aggregate, would not have a Material Adverse
Effect; (v) notify the Administrative Agent, not later than 30 days prior to the
date of the expiration of the term of any Qualified Lease, of the
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Borrower's or any Subsidiary or Eligible Joint Venture of the Borrower's
intention either to renew or to not renew any such Qualified Lease, and, if the
Borrower or any Subsidiary or Eligible Joint Venture of the Borrower intends to
renew such Qualified Lease, the terms and conditions of such renewal; and (vi)
maintain each Operating Lease in full force and effect and enforce the
obligations of the Operating Lessee thereunder, in a timely manner except to the
extent that the failure to do so, in the aggregate, would not have a Material
Adverse Effect.
(b) The Borrower shall take all actions and do all things within its
power or control necessary or required to cause each Operating Lessee to (i)
keep, observe, comply with and perform all of the terms, provisions, covenants
and undertakings on its part required by each Operating Lease, each License,
each sublease and Management Agreement relating to any Hotel, and (ii) to
enforce the provisions of each License and each Management Agreement, if the
failure to comply or enforce such agreements would be reasonably likely, in the
aggregate, to have a Material Adverse Effect.
6.14. Intentionally Omitted.
6.15. Employee Plans. For each Plan and any related trust hereafter
adopted or maintained by a Loan Party or any of its ERISA Affiliates intended to
qualify under Code Section 125, 401 or 501, the Borrower shall (i) seek, and
cause such of its ERISA Affiliates to seek, and receive determination letters
from the IRS to the effect that such plan is so qualified; and (ii) cause such
plan to be so qualified.
6.16. Intentionally Omitted.
6.17. Fiscal Year. The Borrower shall maintain as its Fiscal Year the
twelve month period ending on December 31 of each year.
6.18. Environmental Matters. (a) The Borrower shall comply and shall
cause each of its Subsidiaries and Eligible Joint Ventures and each property
owned or leased by such parties to comply in all material respects with all
applicable Environmental Laws currently or hereafter in effect.
(b) If Administrative Agent or Lenders at any time have a reasonable
basis to believe that there may be a material violation of any Environmental Law
by the Borrower or any of its Subsidiaries and Eligible Joint Ventures or any
Operator related to any real property owned or leased by the Borrower or any of
its Subsidiaries and Eligible Joint Ventures, or real property
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adjacent to such real property, then the Borrower agrees, upon request from the
Administrative Agent, to provide the Administrative Agent, at the Borrower's
expense, with such reports, certificates, engineering studies or other written
material or data as the Administrative Agent or Lenders may reasonably require
so as to reasonably satisfy the Administrative Agent and Lenders that the
Borrower or such Subsidiary, Eligible Joint Venture or real property owned or
leased by them is in material compliance with all applicable Environmental Laws.
Furthermore, Administrative Agent shall have the right to inspect during normal
business hours any real property owned or leased by the Borrower or any of its
Subsidiaries or Eligible Joint Ventures if at any time Administrative Agent or
Lenders have a reasonable basis to believe that there may be such a material
violation of Environmental Law.
(c) The Borrower shall, and shall cause each of its Subsidiaries and
Eligible Joint Ventures and each Operating Lessee to, take such Remedial Action
or other action as required by Environmental Laws, as any Governmental Authority
requires, except to the extent contested in good faith and by proper
proceedings, or as is appropriate and consistent with good business practice.
6.19. REIT Requirements. The Borrower shall operate its business at all
times so as to satisfy all requirements necessary to qualify as an
equity-oriented real estate investment trust under Sections 856 through 860 of
the Code. The Borrower will maintain adequate records so as to comply with all
record-keeping requirements relating to the qualification of the Borrower as an
equity-oriented real estate investment trust as required by the Code and
applicable regulations of the Department of the Treasury promulgated thereunder
and will properly prepare and timely file with the IRS all returns and reports
required thereby. The Borrower will request from its shareholders all
shareholder information required by the Code and applicable regulations of the
Department of Treasury promulgated thereunder.
6.20. Maintenance of FF&E Reserves. The Borrower shall cause to be
maintained the FF&E Reserves pursuant to the terms of the Operating Leases.
6.21. INTENTIONALLY DELETED
6.22. Further Assurances. At any time upon the request of the
Administrative Agent, the Borrower will, promptly and at its expense, execute,
acknowledge and deliver such further documents and do such other acts and things
as the Administrative Agent may reasonably request to evidence the Loans made
hereunder and interest thereon in accordance with the terms of this Agreement;
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6.23. Unencumbered Hotel Properties/Financial Covenant Imbalance. (a)
The Borrower shall promptly notify the Administrative Agent in writing in the
event that at any time the Borrower or any of its Subsidiaries receives or
otherwise gains knowledge that (i) any Hotel included in the calculation of a
prior Compliance Certificate as an Unencumbered Hotel Property, ceases, for any
reason whatsoever, to be an Unencumbered Hotel Property or (ii) a Financial
Covenant Imbalance exists, and the amount of the Loans which must be repaid to
cure such Financial Covenant Imbalance.
(b) The Administrative Agent, at the expense of the Lenders, which
expense shall not exceed $10,000 without the consent of the Majority Lenders
(but such expense to be reimbursed by the Borrower in the event that a Hotel
fails to meet requirements for an Unencumbered Hotel Property in any material
respect) may make physical and other verifications of any Hotels included as
Unencumbered Hotel Properties in any reasonable manner and through any medium
that the Administrative Agent considers advisable, and the Borrower shall
furnish all such assistance and information as the Administrative Agent may
require in connection therewith.
6.24. Hotel Documents. Within 30 days of Administrative Agent's
request, Borrower shall deliver to Administrative Agent Hotel Documents (to the
extent not already delivered) for any Hotel indicated by Administrative Agent.
ARTICLE VII
NEGATIVE COVENANTS
As long as any of the Obligations or Commitments remain outstanding,
without the written consent of the Administrative Agent, the Borrower agrees
with the Lenders and the Administrative Agent that:
7.1. Restrictions on Wholly-Owned Subsidiaries. (a) The Borrower shall
not create or acquire any direct or indirect wholly-owned Subsidiary after the
Closing Date unless (i) if such Subsidiary is a Required Guarantor, concurrently
with the creation or acquisition thereof, such Subsidiary executes and delivers
to the Administrative Agent a Subsidiary Guaranty or (ii) if such Subsidiary is
not a Required Guarantor the organizational documents and agreement of limited
partnership (or equivalent) of such Subsidiary provide that such Subsidiary
shall not incur any Indebtedness (other than (A) intercompany Indebtedness owed
to Borrower and (B) Indebtedness which is either (x) Non-Recourse Indebtedness
or (y) recourse to such Subsidiary provided such Indebtedness (I) does not
exceed 65% of the value of
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such Subsidiary's assets which secures such Indebtedness and (II) is secured by
all of the Hotels owned by such Subsidiary).
(b) No wholly-owned Subsidiary which is acquired or created after the
Closing Date may (i) incur any Indebtedness (other than (A) intercompany
Indebtedness owed to Borrower and (B) Indebtedness which is either (x)
Non-Recourse Indebtedness or (y) recourse to such Subsidiary provided such
Indebtedness (I) does not exceed 65% of the value of such Subsidiary's assets
which secures such Indebtedness and (II) is secured by all of the Hotels owned
by such Subsidiary) or (ii) be subject to any contractual restriction on such
Subsidiary's ability to declare or pay dividends or distribute cash or other
assets to Borrower or any of its Subsidiaries.
(c) Borrower shall not permit any direct or indirect wholly-owned
Subsidiary to own assets (including the assets of such Person's Subsidiaries)
the value of which exceed 10% of Total Value unless such Subsidiary executes and
delivers to the Administrative Agent a Subsidiary Guaranty, provided, that in
the event the aggregate value of the assets of all wholly-owned Subsidiaries
which are not Guarantors exceed 20% of Total Value then Borrower shall not
permit any direct or indirect wholly-owned Subsidiary formed thereafter to own
assets (including the assets of such Person's Subsidiaries) the value of which
exceed 1% of Total Value unless such Subsidiary executes and delivers to the
Administrative Agent a Subsidiary Guaranty.
7.2. Operation/Ownership of Hotels. (a) Borrower shall not own or lease
(directly or indirectly) any Hotels which are not (i) leased to an Operating
Lessee pursuant to an Operating Lease within 90 days of Borrower's (or a
Subsidiary's) acquisition of such Hotel, (ii) managed pursuant to a Management
Agreement and (iii) operated pursuant to and with the benefit of a License. The
aggregate value of any Hotels owned or leased by the Borrower (directly or
indirectly) which are not managed by a Manager may not exceed 10% of Total
Value.
(b) The aggregate value of any Hotels owned or leased by the Borrower
(directly or indirectly) which are not operated under a nationally recognized
brand may not exceed 10% of Total Value.
7.3. Lease Obligations. (a) The Borrower shall not create or suffer to
exist, or permit any of its Subsidiaries or Eligible Joint Ventures to create or
suffer to exist, any obligations as lessee for the rental or hire of real or
personal property of any kind under other leases or agreements to lease entered
into otherwise than in the ordinary course of business.
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(b) The Borrower shall not, and shall not permit any of its
Subsidiaries or Eligible Joint Ventures to, become or remain liable as lessee or
guarantor or other surety with respect to any lease, whether an operating lease
or a Capitalized Lease, of any property (whether real or personal or mixed),
whether now owned or hereafter acquired, which (i) the Borrower or any of its
Subsidiaries or Eligible Joint Ventures has sold or transferred or is to sell or
transfer to any other Person, or (ii) the Borrower or any of its Subsidiaries or
Eligible Joint Ventures intends to use for substantially the same purposes as
any other property which has been or is to be sold or transferred by that entity
to any other Person in connection with such lease.
7.4. Restricted Payments. The Borrower, unless otherwise required in
order to maintain FelCor's status as a real estate investment trust in
accordance with the written advice of independent counsel to the Borrower, shall
not declare or make any dividend payment or other distribution of assets,
properties, cash, rights, obligations or securities (other than the Bristol
Distribution) on account or in respect of any of its Stock or Stock Equivalents
(collectively, "Restricted Payments"); provided, that, notwithstanding the
foregoing, during any period of four consecutive Fiscal Quarters, (i) the
Borrower may make Restricted Payments in an aggregate amount not to exceed 85%
of the consolidated Adjusted Funds From Operations of the Borrower for such
period and (ii) the aggregate amount of Restricted Payments made shall not
exceed 100% of Free Cash Flow of the Borrower for such period.
7.5. Mergers, Stock Issuances, Asset Sales, Etc. (a) The Borrower shall
not sell, convey, transfer, lease or otherwise dispose of all or substantially
all of its assets or properties, and shall not, and shall not permit any of its
Subsidiaries or Eligible Joint Ventures to, (i) merge with any Person, or (ii)
consolidate with any Person, unless the Borrower or its Subsidiary or Eligible
Joint Venture is the surviving or resulting entity and, following such merger or
consolidation, no Default or Event of Default shall have occurred.
(b) The Borrower shall not and shall not permit any of its Subsidiaries
or Eligible Joint Ventures to effect, enter into, consummate or suffer to exist
any Asset Sale(s) of any Hotel(s) generating proceeds aggregating more than 25%
of the greater of the value of the Hotels owned by the Borrower, its
Subsidiaries and Eligible Joint Ventures (x) as at the Closing Date or (y) if
the Bristol Merger occurs, as at the Bristol Merger Date.
(c) The Borrower shall not sell or otherwise dispose of, or factor at
maturity or collection, or permit any of its Subsidiaries or Eligible Joint
Ventures to
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sell or otherwise dispose of, or factor at maturity or collection, any accounts
receivables.
7.6. Restrictions on Construction/Budget Hotels. (a) The Borrower shall
not, and shall not permit any of its Subsidiaries or Eligible Joint Ventures to
(i) engage in the construction of new hotels (provided that nothing herein shall
prohibit expansions to existing Hotels) or (ii) enter into any commitments or
agreements to purchase any Hotels under, or to be under, original construction
(provided that nothing herein shall limit commitments or agreements for
expansions to existing Hotels), pursuant to which (A) such Persons' obligations,
in the aggregate, exceed the lesser of (x) 15% of the Total Value of the
Borrower as of the end of the Fiscal Quarter immediately preceding the date of
any such commitment or agreement and (y) $300,000,000, or (B) any such Person is
or may be liable for, or otherwise assumes, any risks relating to the
development or construction (but not operation) of such Hotel, whether by way of
providing any guaranties of completion, payment of any construction loans,
payment of construction cost overruns, or otherwise.
(b) Other than Borrower's (or its Subsidiary's or Unconsolidated
Entity's) investments in budget hotels, limited service hotels or extended stay
hotels which are in existence as of the Effective Date plus those acquired by
Borrower (as a direct result of the Bristol Merger) on the Bristol Merger Date,
the Borrower's investments (direct or indirect) in any budget hotels, limited
service hotels or extended stay hotels, shall not exceed, in the aggregate, 10%
of Total Value.
7.7. Change in Nature of Business or in Capital Structure. (a) The
Borrower shall not make, and shall not permit any of its Subsidiaries or
Eligible Joint Ventures to make, any material change in the nature or conduct of
its business as carried on at the Closing Date except as contemplated by the
Bristol Merger on the Bristol Merger Date.
(b) The Borrower shall not make, and shall not permit any of its
Subsidiaries or Eligible Joint Ventures to make, any change in its capital
structure (including, without limitation, in the terms of its outstanding Stock)
or amend its declaration of trust, certificate of incorporation or by-laws or
other equivalent documents other than for changes or amendments which in the
aggregate have no Material Adverse Effect.
7.8. Modification of Material Agreements. The Borrower shall not, and
shall not permit any of its Subsidiaries or Eligible Joint Ventures to, alter,
amend, modify, rescind, terminate, supplement or waive any of their respective
rights
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under, or fail to comply in all material respects with, any of its material
Contractual Obligations unless approved by the Administrative Agent, which
approval shall not be unreasonably withheld, conditioned or delayed; provided,
however, that, with respect to any such failure to comply with any Contractual
Obligation, the Borrower shall not be deemed in default of this Section 7.8 if
all such failures in the aggregate would have no Material Adverse Effect; and
provided, further, that in the event of any breach or event of default by a
Person other than the Borrower or any of its Subsidiaries or Eligible Joint
Ventures, the Borrower shall promptly notify the Administrative Agent of any
such breach or event of default and take all such action as may be reasonably
necessary in order to endeavor to avoid having such breach or event of default
have a Material Adverse Effect.
7.9. Accounting Changes. The Borrower shall not make, nor permit any of
its Subsidiaries to make, any change in accounting treatment and reporting
practices or tax reporting treatment, except as required by GAAP or law and
disclosed to the Lenders and the Administrative Agent.
7.10. Transactions with Affiliates. The Borrower shall not, and shall
not permit any of its Subsidiaries or Eligible Joint Ventures, to enter into any
transaction or series of related transactions, including, without limitation,
any Asset Sale or the rendering of any service, with any Affiliate (other than
among the Borrower and its wholly owned Subsidiaries) unless (a) no Default or
Event of Default would occur as a result thereof, and (b) such transaction is
(i) in the ordinary course of the Borrower's or such Subsidiary's or Eligible
Joint Venture's business, and (ii) upon fair and reasonable terms no less
favorable to the Borrower or such Subsidiary or Eligible Joint Venture, as the
case may be, than it would obtain in a comparable arm's length transaction with
a Person which is not an Affiliate.
7.11. Adverse or Speculative Transactions. The Borrower shall not and
shall not permit any of its Subsidiaries or Eligible Joint Ventures to engage in
any transaction involving contracts for commodity options or futures contracts
other than Interest Rate Contracts and Alternative Currency Contracts.
7.12. Environmental Matters. (a) The Borrower shall not, and shall not
permit any of its Subsidiaries or Eligible Joint Ventures or any Operating
Lessee, or, to the extent reasonably practicable, any other Person to dispose of
any Hazardous Material by placing it in or on the ground or waters of any
property owned or leased by the Borrower or any of its Subsidiaries or Eligible
Joint Ventures.
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(b) The Borrower shall not, and shall not permit any of its
Subsidiaries or Eligible Joint Ventures, or, to the extent practicable,
authorize any other Person to, dispose or to arrange for the disposal of any
Hazardous Material on behalf of the Borrower or any of its Subsidiaries or
Eligible Joint Ventures except in material compliance with all applicable
Environmental Laws currently and hereinafter in effect.
7.13. Joint Enterprises. Other than investments in (x) Joint
Enterprises in existence as of the Effective Date plus those investments in
Joint Enterprises acquired by Borrower on the Bristol Merger Date and as a
direct result of the Bristol Merger and (y) Eligible Entities, the Borrower's
investments (direct or indirect) in Joint Enterprises shall not exceed, in the
aggregate, 15% of Total Value.
7.14. Intentionally Omitted.
7.15. ERISA Plan Assets. The Borrower shall not and shall not permit
any of its Subsidiaries to have any of their assets become subject to Title I of
ERISA because they constitute "plan assets" within the meaning of the DOL
Regulation Section 2510.3-101 and by reason of an investment in the Borrower or
any Subsidiary.
ARTICLE VIII
EVENTS OF DEFAULT
8.1. Events of Default. Each of the following events shall be an Event
of Default:
(a) The Borrower shall fail to pay any principal (including, without
limitation, mandatory prepayments of principal) of, or interest on, any
Loan, any Unpaid Drawing, any fee, any other amount due hereunder or under
the other Loan Documents or other of the Obligations when the same becomes
due and payable; or
(b) Any representation or warranty made or deemed made by any Loan
Party in any Loan Document or by any Loan Party (or any of its officers) in
connection with any Loan Document shall prove to have been incorrect in any
material respect when made or deemed made; or
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(c) Any Loan Party shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement or in any other Loan
Document if such failure shall remain unremedied for thirty days after the
earlier of the date on which (A) a Responsible Officer of the Borrower
becomes aware of such failure or (B) written notice thereof shall have been
given to the Borrower by the Administrative Agent or any Lender; or
(d) Any Loan Party or any of its Subsidiaries shall fail to pay any
principal of or premium or interest on any Recourse Indebtedness of such
Loan Party or Subsidiary having a principal amount of $10,000,000 or more
(excluding Indebtedness evidenced by the Notes and any Non-Recourse
Indebtedness), when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise); or any
other event shall occur or condition shall exist under any agreement or
instrument relating to any such Indebtedness, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity
of such Indebtedness; or any such Indebtedness shall become or be declared
to be due and payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), or any Loan Party or any of its Subsidiaries
shall be required to repurchase or offer to repurchase such Indebtedness,
prior to the stated maturity thereof; or
(e) The Borrower or any of its Significant Subsidiaries shall generally
not pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment for
the benefit of creditors, or any proceeding shall be instituted by or
against the Borrower or any of its Significant Subsidiaries seeking to
adjudicate it bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a custodian, receiver, trustee or other similar
official for it or for any substantial part of its property and, in the case
of any such proceedings instituted against the Borrower or any of its
Significant Subsidiaries (but not instituted by it), either such proceedings
shall remain undismissed or unstayed for a period of 60 days or any of the
actions sought in such proceedings shall occur; or the Borrower or any of
its Significant Subsidiaries shall take any corporate action to authorize
any of the actions set forth above in this subsection (e); or
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(f) Any judgment or order for the payment of money in excess of
$10,000,000 to the extent not fully covered by insurance shall be rendered
against any Loan Party or any of its Subsidiaries and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order, or (ii) there shall be any period of 10 consecutive days during which
a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; or
(g) An ERISA Event shall occur which, in the reasonable determination
of the Majority Lenders, has a reasonable possibility of a liability,
deficiency or waiver request of the Borrower or any ERISA Affiliate, whether
or not assessed, exceeding $5,000,000; or
(h) The Borrower or any of its Subsidiaries shall have entered into any
consent or settlement decree or agreement or similar arrangement with an
Governmental Authority or any judgment, order, decree or similar action
shall have been entered against the Borrower or any of its Subsidiaries, in
each case based on or arising from the violation of or pursuant to any
Environmental Law, or the generation, storage, transportation, treatment,
disposal or Release of any Hazardous Material and, in connection with all
the foregoing, the Borrower and its Subsidiaries are likely to incur
Environmental Liabilities and Costs in excess of $5,000,000; or
(i) There shall occur a Material Adverse Change or an event which is
reasonably likely to have a Material Adverse Effect; or
(j) FelCor shall cease, for any reason, to maintain its status as an
equity-oriented real estate investment trust under Sections 856 through 860
of the Code; or
(k) FelCor shall cease at any time to be the sole general partner of
FelCor LP; or
(l) INTENTIONALLY DELETED
(m) Hervey A. Feldman or Thomas J. Corcoran, Jr. shall sell, transfer
or encumber (otherwise than to (i) members of their respective families,
(ii) entities controlled by them, (iii) trusts for the benefit of any of the
foregoing or (iv) a Permitted Transferee) their voting Class A membership
interest in DJONT; or
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(n) INTENTIONALLY DELETED
(o) Any provision of any Subsidiary Guaranty after delivery thereof
under Section 3.1 shall for any reason cease to be valid and binding on any
Significant Subsidiary party thereto, or any Significant Subsidiary Party
shall so state in writing.
8.2. Remedies. (a) If there shall occur and be continuing any Event of
Default, the Administrative Agent (i) shall at the request, or may with the
consent, of the Majority Lenders by notice to the Borrower, declare the
obligation of each Lender to make Loans and the Issuing Lender to issue a Letter
of Credit to be terminated, whereupon the same shall forthwith terminate, and
(ii) shall at the request, or may with the consent, of the Majority Lenders by
notice to the Borrower, declare the Loans, all interest thereon and all other
amounts and Obligations payable under this Agreement to be forthwith due and
payable, whereupon the Notes, all such interest and all such amounts and
Obligations shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower; provided, however, that upon the occurrence of the Event
of Default specified in subparagraph 8.1(e) above, (A) the obligation of each
Lender to make Loans and of the Issuing Lender to issue Letters of Credit shall
automatically be terminated and (B) the Loans, all such interest and all such
amounts and Obligations shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Borrower. In addition to the remedies set forth
above, the Administrative Agent may exercise any remedies provided by applicable
law.
(b) If the Administrative Agent exercises any rights or remedies
pursuant to subparagraph 8.2(a), the Administrative Agent shall not, without the
consent of the Majority Lenders, rescind the exercise of said rights or
remedies.
8.3 Actions in Respect of Letters of Credit. (a) Upon the Termination
Date, the Borrower shall pay to the Administrative Agent in immediately
available funds at the Administrative Agent's office, for deposit in a special
non-interest-bearing cash collateral account (the "L/C Cash Collateral Account")
to be maintained with and in the name of the Administrative Agent on behalf of
the Lenders at such place as shall be designated by the Administrative Agent, an
amount equal to all outstanding Letter of Credit Outstandings.
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(b) The Borrower hereby pledges, and grants to the Administrative Agent
a Lien on all of its right, title and interest in and to all funds held in the
L/C Cash Collateral Account from time to time, and all proceeds thereof, as
security for the payment of all amounts due and to become due from the Borrower
to the Lenders and the Issuing Lender.
(c) The Administrative Agent may, from time to time after funds are
deposited in the L/C Cash Collateral Account, apply funds then held in the L/C
Cash Collateral Account to the payment of any amounts, in such order as the
Administrative Agent may elect, as shall have become or shall become due and
payable by the Borrower to the Issuing Lender or Lenders in respect of the
Letter of Credit Outstandings.
(d) Neither the Borrower nor any Person claiming on behalf of or
through the Borrower shall have any right to withdraw any of the funds held in
the L/C Cash Collateral Account. The Borrower agrees that it will not (i) sell
or otherwise dispose of any interest in the L/C Cash Collateral Account or any
funds held therein or (ii) create or permit to exist any Lien upon or with
respect to the L/C Cash Collateral Account or any funds held therein, except as
provided in or contemplated by this Agreement.
(f) The Administrative Agent may also exercise, in its sole discretion,
in respect of the L/C Cash Collateral Account, in addition to the other rights
and remedies provided for herein or otherwise available to it, all the rights
and remedies of a secured party upon default under the Uniform Commercial Code
in effect in the State of New York at that time, and the Administrative Agent
may, without notice except as specified below, sell the L/C Cash Collateral
Account or any part thereof in one or more sales, at public or private sale, at
any of the Administrative Agent's offices or elsewhere, for cash, or credit or
for future delivery, and upon such other terms as the Administrative Agent may
deem commercially reasonable. The Borrower agrees that, to the extent notice of
sale shall be required by law, at least ten days' notice to the Borrower of the
time and place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. The Administrative Agent shall
not be obligated to make any sale of the L/C Cash Collateral Account, regardless
of notice of sale having been given. The Administrative Agent may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.
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(g) Any cash held in the L/C Cash Collateral Account, and all cash
proceeds received by the Administrative Agent in respect of any sale of,
collection from or other realization upon all or any part of the L/C Cash
Collateral Account, may, in the discretion of the Administrative Agent, then or
at any time thereafter be applied (after all payments provided for in Section
8.3(c), the expiration of all outstanding Letters of Credit and the payment of
any amounts payable pursuant to Section 10.4) in whole or in part by the
Administrative Agent against all or any part of the other Obligations in such
order as the Administrative Agent shall elect. Any surplus of such cash or cash
proceeds held by the Administrative Agent and remaining after the indefeasible
cash payment in full of all of the Obligations shall be paid over to the
Borrower or to whomsoever may be lawfully entitled to receive such surplus.
ARTICLE IX
THE ADMINISTRATIVE AGENT
9.1. Authorization and Action. (a) Each Lender hereby appoints and
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement and the other Loan Documents as
are delegated to the Administrative Agent by the terms hereof and thereof,
together with such powers as are reasonably incidental thereto. Without
limitation of the foregoing, each Lender hereby authorizes the Administrative
Agent to execute and deliver, and to perform its obligations under, each of the
Loan Documents to which the Administrative Agent is a party, and to exercise all
rights, powers and remedies that the Administrative Agent may have under such
Loan Documents.
(b) As to any matters not expressly provided for by this Agreement and
the other Loan Documents (including, without limitation, enforcement or
collection of the Notes), the Administrative Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Majority Lenders, and such
instructions
shall be binding upon all Lenders and all holders of Notes; provided, however,
that the Administrative Agent shall not be required to take any action which the
Administrative Agent in good faith believes exposes it to personal liability or
is contrary to this Agreement or applicable law. The Administrative Agent agrees
to give to each Lender prompt notice of (a) each notice and, (b) to the extent
the Administrative Agent grants any consents, approvals, disapprovals or waivers
to the Borrower pursuant to the directions of the Majority Lenders or all of the
Lenders as required hereunder, notice of such consent,
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approval, disapproval or waiver, given to it by, or by it to, any Loan Party
pursuant to the terms of this Agreement or the other Loan Documents.
9.2. Administrative Agent's Reliance, Etc. Neither the Administrative
Agent, nor any of its Affiliates or any of the respective directors, officers,
agents or employees of the Administrative Agent or any such Affiliate shall be
liable for any action taken or omitted to be taken by it, him, her or them under
or in connection with this Agreement or the other Loan Documents, except for
its, his, her or their own gross negligence or wilful misconduct. Without
limitation of the generality of the foregoing, the Administrative Agent (i) may
treat the payee of any Note as the holder thereof until such note has been
assigned in accordance with Section 10.7; (ii) may rely on the Register to the
extent set forth in Section 10.7(c); (iii) may consult with legal counsel
(including, without limitation, counsel to the Borrower or any other Loan
Party), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (iv)
makes no warranty or representation to any Lender and shall not be responsible
to any Lender for any statements, warranties or representations made in or in
connection with this Agreement or any of the other Loan Documents; (v) shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of this Agreement or any of the other
Loan Documents on the part of the Borrower or any other Loan Party or to inspect
the property (including, without limitation, the books and records) of the
Borrower or any other Loan Party; (vi) shall not be responsible to any Lender
for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any of the other Loan Documents or any
other instrument or document furnished pursuant hereto or thereto; and (vii)
shall incur no liability under or in respect of this Agreement or any of the
other Loan Documents by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telegram, cable, telex or facsimile
transmission) believed by it to be genuine and signed or sent by the proper
party or parties.
9.3. Chase and Affiliates. With respect to its Commitments, the Loans
made by it and each Note issued to it, and Letters of Credit issued by it, Chase
shall have the same rights and powers under this Agreement as any other Lender
and may exercise the same as though it were not the Administrative Agent; and
the term "Lender" or "Lenders" shall, unless otherwise expressly indicated,
include Chase in its individual capacity. Chase and its affiliates may accept
deposits from, lend money to, act as trustee under indentures of, and generally
engage in any kind of business with, the Borrower or any other Loan Party or any
of their respective Subsidiaries
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and any Person who may do business with or own securities of the Borrower or any
other Loan Party or any of their respective Subsidiaries, all as if Chase were
not the Administrative Agent and without any duty to account therefor to the
Lenders.
9.4. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent or any other
Lender and based on the financial statements referred to in Article IV and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and other
Loan Documents.
9.5. Indemnification. The Lenders agree to indemnify the Issuing
Lender, the Administrative Agent and their Affiliates, and their respective
directors, officers, employees, agents and advisors (to the extent not
reimbursed by the Borrower or other Loan Parties), ratably according to the
respective principal amounts of the Notes then held by each of them (or if no
Notes are at the time outstanding, ratably according to the respective amounts
of the aggregate of their Commitments), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses and disbursements (including, without limitation, fees and
disbursements of legal counsel) of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against, the Administrative Agent in any
way relating to or arising out of this Agreement or the other Loan Documents or
any action taken or omitted by the Administrative Agent under this Agreement or
the other Loan Documents; provided, however, that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent's or such Affiliate's gross negligence or wilful
misconduct. Without limitation of the foregoing, each Lender agrees to reimburse
the Administrative Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including, without limitation, fees and disbursements of
legal counsel) incurred by the Administrative Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of its rights or responsibilities under, this
Agreement or the other Loan Documents, to the extent that the Administrative
Agent is not reimbursed for such expenses by the Borrower or another Loan Party.
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9.6. Successor Agent. The Administrative Agent may resign at any time
by giving written notice thereof to the Lenders and the Borrower and may be
removed by the Super Majority Lenders in the event that the Administrative Agent
commits a willful breach of, or is grossly negligent in the performance of, its
material obligations hereunder. Furthermore, in the event that at any time the
Administrative Agent assigns its entire interest as a Lender hereunder to an
Eligible Assignee as permitted by Section 10.7 hereof, which Eligible Assignee
is not an Affiliate of the Administrative Agent, then the Administrative Agent
shall resign as Administrative Agent. Upon any such resignation or removal
(which shall be effective upon such date as a successor Agent accepts its
appointment), the Majority Lenders shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Majority
Lenders, and shall have accepted such appointment, within 30 days after the
retiring Administrative Agent's giving of notice of resignation or the Super
Majority Lenders' removal of the retiring Administrative Agent, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a successor
Agent, which shall be a commercial bank organized under the laws of the United
States of America or of any State thereof, having a combined capital and surplus
of at least $50,000,000. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents. After any
retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent, the provisions of this Article IX shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Loan Documents.
ARTICLE X
MISCELLANEOUS
10.1. Amendments, Etc. (a) No amendment or waiver of any provision of
this Agreement nor consent to any departure by the Borrower therefrom shall in
any event be effective unless the same shall be in writing and signed by the
Majority Lenders, and then any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; provided
that, (x) the Administrative Agent shall have the right to waive or depart from
any of the requirements or criteria contained in the definition of Qualified
Lease and (y) subject to Sections 10.1(b) and (c) below, the Administrative
Agent shall have the right to
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make non-material waivers of non-economic provisions of this Agreement or
consent to non-material departures therefrom. The parties hereto agree that any
non-material waiver of any provision of this Agreement or any other Loan
Document shall be effective upon the execution by the party so charged of a
written agreement to such effect.
(b) Notwithstanding anything set forth in subparagraph (a) above, no
amendment, waiver or consent shall, unless in writing and signed by all the
Lenders do any of the following: (i) waive any of the conditions specified in
Article III except as otherwise provided therein; (ii) increase the Commitments
of the Lenders or subject the Lenders to any additional obligations; (iii)
reduce the principal of, or interest on, the Loans or any fees or other amounts
payable hereunder; (iv) waive or postpone any date fixed for any payment of
principal of, or interest on, the Loans or any fees or other amounts payable
hereunder; (v) change the percentage of the Commitments, the aggregate unpaid
principal amount of the Loans, or the number of Lenders which shall be required
for the Lenders or any of them to take any action hereunder; (vi) waive any of
the financial covenants specified in Sections 5.1, 5.2 or 5.4; (vii) change the
definitions of Available Credit, Majority Lenders or Super Majority Lenders
(provided that the foregoing shall not include changes in any defined terms used
in such definitions), (viii) release any Loan Party from its obligations under
any Note or any Subsidiary Guaranty, or (ix) amend this Section 10.1; and
provided, further, that no amendment, waiver or consent shall, unless in writing
and signed by the Administrative Agent in addition to the Lenders required above
to take such action, affect the rights or duties of the Administrative Agent
under this Agreement or the other Loan Documents.
(c) Notwithstanding anything set forth in subparagraph (a) above, no
amendment, waiver or consent shall, (x) unless in writing and signed by the
Super Majority Lenders do any of the following: (i) waive any of the covenants
specified in Sections 5.3 or 5.5, (ii) change the definitions of Unencumbered
Hotel Property or Eligible Joint Venture (provided that the foregoing shall not
include changes in any defined terms used in such definitions), (iii) waive
payment of any default rate interest pursuant to Section 2.9(b), or (iv) remove
the Administrative Agent for a willful breach of, or gross negligence in the
performance of, its material obligations hereunder pursuant to Section 9.6 or
(y) unless in writing and signed by the Majority Lenders change the definitions
of Adjusted NOI or Unencumbered NOI (provided that the foregoing shall not
include changes in any defined terms used in such definitions).
(d) Each Lender shall reply promptly, but in any event within ten (10)
Business Days of receipt by such Lender of a request for consent, approval,
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disapproval or waiver, from the Administrative Agent (the "Lender Reply
Period"). Unless a Lender shall give written notice to the Administrative Agent
that it objects to consenting, approving, disapproving or waiving any matter as
requested by the Administrative Agent (together with a written explanation of
the reasons behind such objection) within the Lender Reply Period, such Lender
shall be deemed to have consented, approved, disapproved or waived such matters
as specified in the Administrative Agent's request.
10.2. Notices, Etc. All notices and other communications provided for
hereunder shall be in writing (including, without limitation, telegraphic,
telex, telecopy or cable communication) and mailed, telegraphed, telexed,
telecopied, cabled or delivered by hand, if to the Borrower, at its address at
545 East John Carpenter Freeway, Suite 1300, Irving, Texas 75062 (telecopy
number: 972-444-4949) (telephone number: 972-444-4900), Attention: Chief
Financial Officer, with a copy to Attention: General Counsel; if to any Lender,
at its Domestic Lending Office specified opposite its name on Schedule II; and
if to the Administrative Agent, at its address at 380 Madison Avenue, 10th
Floor, New York, New York 10017 (telecopy number: 212-622-3395) (telephone
number: 212-622-3369), Attention Charles Hoagland with a copy to One Chase
Manhattan Plaza, 8th Floor, New York, New York 10081 (telecopy number:
212-552-5701) (telephone number: 212-552-7469), Attention Linda Rodriguez; or,
as to the Borrower or the Administrative Agent, at such other address as shall
be designated by such party in a written notice to the other parties and, as to
each other party, at such other address as shall be designated by such party in
a written notice to the Borrower and the Administrative Agent. All such notices
and communications shall, when mailed, telegraphed, telexed, telecopied, cabled
or delivered, be effective when deposited in the mails, delivered to the
telegraph company, confirmed by telex answerback, telecopied with confirmation
of receipt, delivered to the cable company or delivered by hand to the addressee
or its agent, respectively, except that notices and communications to the
Administrative Agent pursuant to Article II or IX shall not be effective until
received by the Administrative Agent.
10.3. No Waiver; Remedies. No failure on the part of any Lender or the
Administrative Agent to exercise, and no delay in exercising, any right
hereunder or under any Note shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
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<PAGE> 114
10.4. Costs; Expenses; Indemnities. (a) The Borrower agrees to pay on
demand (i) all costs and expenses of the Administrative Agent and its respective
Affiliates in connection with the preparation, execution, delivery,
administration, syndication, modification and amendment of this Agreement, each
of the other Loan Documents and each of the other documents to be delivered
hereunder and thereunder, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel, accountants, appraisers, consultants or
industry experts retained by the Administrative Agent with respect thereto and,
as to the Administrative Agent, with respect to advising it as to its rights and
responsibilities under this Agreement and the other Loan Documents, and (ii) all
costs and expenses of the Administrative Agent or any of the Lenders (including,
without limitation, the fees and out-of-pocket expenses of counsel, accountants,
appraisers, consultants or industry experts retained by the Administrative Agent
or any Lender) in connection with the restructuring or enforcement (whether
through negotiation, legal proceedings or otherwise) of this Agreement and the
other Loan Documents.
(b) The Borrower agrees to indemnify and hold harmless the
Administrative Agent, each Lender and the Issuing Lender and their respective
Affiliates, and the directors, officers, employees, agents, attorneys,
consultants and advisors of or to any of the foregoing (including, without
limitation, those retained in connection with the satisfaction or attempted
satisfaction of any of the conditions set forth in Article III) (each of the
foregoing being an "Indemnitee") from and against any and all claims, damages,
liabilities, obligations, losses, penalties, actions, judgments, suits, costs,
disbursements and expenses of any kind or nature (including, without limitation,
fees and disbursements of counsel to any such Indemnitee and experts, engineers
and consultants and the costs of investigation and feasibility studies) which
may be imposed on, incurred by or asserted against any such Indemnitee in
connection with or arising out of any investigation, litigation or proceeding,
whether or not any such Indemnitee is a party thereto, whether direct, indirect,
or consequential and whether based on any federal, state or local law or other
statutory regulation, securities or commercial law or regulation, or under
common law or in equity, or on contract, tort or otherwise, in any manner
relating to or arising out of or based upon or attributable to this Agreement,
any other Loan Document, any document delivered hereunder or thereunder, any
Obligation, or any act, event or transaction related or attendant to any
thereof, including, without limitation, (i) arising from any misrepresentation
or breach of warranty under Section 4.18 or any Environmental Claim or any
Environmental Lien or any Remedial Action arising out of or based upon anything
relating to real property owned or leased by the Borrower or any of its
Subsidiaries (collectively, the "Indemnified Matters"); provided, however, that
the Borrower shall not have any obligation under this Section
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<PAGE> 115
10.4(b) to an Indemnitee with respect to any Indemnified Matter caused by or
resulting from the gross negligence or willful misconduct of that Indemnitee, as
determined by a court of competent jurisdiction in a final non-appealable
judgment or order.
(c) If any Lender receives any payment of principal of, or is subject
to a conversion of, any Eurodollar Rate Loan other than on the last day of an
Interest Period relating to such Loan, as a result of any payment or conversion
made by the Borrower or acceleration of the maturity of the Notes pursuant to
Section 8.2 or for any other reason, the Borrower shall, upon demand by such
Lender (with a copy of such demand to the Administrative Agent), to the extent
not previously paid to such Lender pursuant to any other provision hereof, pay
to the Administrative Agent for the account of such Lender all amounts required
to compensate such Lender for any additional losses, costs or expenses which it
may reasonably incur as a result of such payment or conversion, including,
without limitation, any loss (including, without limitation, loss of anticipated
profits), cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by such Lender to fund or maintain such
Loan.
(d) The Borrower shall indemnify the Administrative Agent, the Lenders
and the Issuing Lender for, and hold the Administrative Agent, the Lenders and
the Issuing Lender harmless from and against, any and all claims for brokerage
commissions, fees and other compensation made against the Administrative Agent
and the Lenders for any broker, finder or consultant with respect to any
agreement, arrangement or understanding made by or on behalf of any Loan Party
or any of its Subsidiaries in connection with the transactions contemplated by
this Agreement.
(e) The Borrower agrees that any indemnification or other protection
provided to any Indemnitee pursuant to this Agreement (including, without
limitation, pursuant to this Section 10.4) or any other Loan Document shall (i)
survive payment of the Obligations and (ii) inure to the benefit of any Person
who was at any time an Indemnitee under this Agreement or any other Loan
Document.
10.5. Right of Set-off. Upon the occurrence and during the continuance
of any Event of Default each Lender and the Issuing Lender is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Lender to or for the credit or the account of the Borrower against any
and all of the Obligations now or hereafter existing whether or not such Lender
shall have made
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<PAGE> 116
any demand under this Agreement or any Note or any other Loan Document and
although such Obligations may be unmatured. Each Lender agrees promptly to
notify the Borrower after any such set-off and application made by such Lender;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender under this
Section are in addition to the other rights and remedies (including, without
limitation, other rights of set-off) which such Lender may have.
10.6. Binding Effect. This Agreement shall become effective as of the
Effective Date and thereafter shall be binding upon and inure to the benefit of
the Borrower, the Administrative Agent, each Lender and the Issuing Lender and
their respective successors and assigns, except that the Borrower shall not have
the right to assign its rights hereunder or any interest herein without the
prior written consent of the Lenders.
10.7. Assignments and Participations. (a) Each Lender and the Issuing
Lender may sell, transfer, negotiate or assign to one or more other Lenders or
Eligible Assignees all or a portion of its Commitments, commitment to issue
Letters of Credit, the Loans and Letter of Credit Outstandings owing to it and
the Notes held by it and a commensurate portion of its rights and obligations
hereunder and under the other Loan Documents; provided, however, that (i) the
aggregate amount of the Commitments, Loans and Letter of Credit Outstandings
being assigned pursuant to each such assignment (determined as of the date of
the Assignment and Acceptance with respect to such assignment) shall in no event
be less than the assignor's entire interest, except (x) with the consent of the
Borrower and the Administrative Agent, or (y) during the continuance of an Event
of Default, or (z) a Lender may assign a portion of its Commitments, Loans and
Letter of Credit Outstandings to another existing Lender or Lenders only,
provided that the aggregate amount of the Commitments, Loans and Letter of
Credit Outstandings retained by the assignor shall in no event be less than
$10,000,000, and (ii) each assignee hereunder shall also be an Eligible
Assignee. The parties to each assignment shall
execute and deliver to the Administrative Agent, for its acceptance and
recording, an Assignment and Acceptance, together with the Notes (or an
Affidavit of Loss and Indemnity with respect to such Notes satisfactory to the
Administrative Agent) subject to such assignment. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in such
Assignment and Acceptance, (A) the assignee thereunder shall become a party
hereto and, to the extent that rights and obligations under the Loan Documents
have been assigned to such assignee pursuant to such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder and thereunder, and (B)
the assignor thereunder shall, to the extent that rights and
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<PAGE> 117
obligations under this Agreement have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights (except those which survive the
payment in full of the Obligations) and be released from its obligations under
the Loan Documents (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender's rights and obligations
under the Loan Documents, such Lender shall cease to be a party hereto).
(b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any of the statements,
warranties or representations made in or in connection with this Agreement or
any other Loan Document furnished pursuant thereto or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any other Loan Document or any other instrument or document furnished pursuant
hereto or thereto; (ii) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of any Loan Party or the performance or observance by any Loan Party of any of
its obligations under this Agreement or any other Loan Document or of any other
instrument or document furnished pursuant hereto or thereto; (iii) such
assigning Lender confirms that it has delivered to the assignee and the assignee
confirms that it has received a copy of this Agreement and each of the Loan
Documents together with a copy of the most recent financial statements delivered
by the Borrower to the Lenders pursuant to each of the clauses of Section 6.11
(or if no such statements have been delivered, the financial statements referred
to in Section 4.5 of this Agreement) and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Administrative Agent, such assigning Lender or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee confirms that it is an
Eligible Assignee; (vi) such assignee appoints and authorizes the Administrative
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement and the other Loan Documents as are delegated to the
Administrative Agent by the terms hereof and thereof, together with such powers
as are reasonably incidental thereto; and (vii) such assignee agrees that it
will perform in accordance with their terms all of the obligations which by the
terms of this Agreement are required to be performed by it as a Lender and if
such assignor was the Issuing Lender, of the Issuing Lender.
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<PAGE> 118
(c) The Administrative Agent shall maintain at its address referred to
in Section 10.2 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Lenders and the Commitments of and principal amount of the Loans and Letters
of Credit Outstandings owing to each Lender from time to time (the "Register").
The entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and the Loan Parties, the Administrative Agent, the
Issuing Lender and the Lenders may treat each Person whose name is recorded in
the Register as a Lender for all purposes of this Agreement. The Register shall
be available for inspection by the Borrower, the Administrative Agent, the
Issuing Lender or any Lender at any reasonable time and from time to time upon
reasonable prior notice. The Administrative Agent shall supply to the Borrower
promptly after any amendment thereto, a copy of the amended Register.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender or Issuing Lender and an assignee representing that it is an
Eligible Assignee, together with the Notes subject to such assignment, the
Administrative Agent shall, if such Assignment and Acceptance has been
completed, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Borrower. Within five Business Days after its receipt of such
notice, the Borrower, at its own expense, shall execute and deliver to the
Administrative Agent, in exchange for such surrendered Notes, new Notes to the
order of such Eligible Assignee in an amount equal to the Commitments assumed by
it pursuant to such Assignment and Acceptance and, if the assigning Lender has
retained Commitments hereunder, new Notes to the order of the assigning Lender
in an amount equal to the Commitments retained by it hereunder. Such new Notes
shall be dated the same date as the Surrendered Notes and be in substantially
the form of Exhibit A hereto.
(e) In addition to the other assignment rights provided in this Section
10.7, each Lender may assign, as collateral or otherwise, any of its rights
under this Agreement (including, without limitation, rights to payments of
principal or interest on the Loans) to any Federal Reserve Bank without notice
to or consent of the Borrower or the Administrative Agent; provided, however,
that no such assignment shall release the assigning Lender from any of its
obligations hereunder. The terms and conditions of any such assignment and the
documentation evidencing such assignment shall be in form and substance
satisfactory to the assigning Lender and the assignee Federal Reserve Bank.
110
<PAGE> 119
(f) Each Lender may sell participations to one or more banks or other
Persons in or to all or a portion of its rights and obligations under the Loan
Documents (including, without limitation, all or a portion of its Commitments,
the Loans and Letters of Credit Outstandings owing to it and the Notes held by
it). The terms of such participation shall not, in any event, require the
participant's consent to any amendments, waivers or other modifications of any
provision of any Loan Documents, the consent to any departure by any Loan Party
therefrom, or to the exercising or refraining from exercising any powers or
rights which such Lender may have under or in respect of the Loan Documents
(including, without limitation, the right to enforce the obligations of the Loan
Parties), except if any such amendment, waiver or other modification or consent
would reduce the amount, or postpone any date fixed for, any amount (whether of
principal, interest or fees) payable to such participant under the Loan
Documents, to which such participant would otherwise be entitled under such
participation. In the event of the sale of any participation by any Lender, (i)
such Lender's obligations under the Loan Documents (including, without
limitation, its Commitments) shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) such Lender shall remain the holder of such Notes and
Obligations for all purposes of this Agreement, and; (iv) the Borrower, the
Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement.
(g) Each participant shall be entitled to the benefits of Sections
2.11, 2.13, 2.15 and 10.4 as if it were a Lender; provided, however, that
anything herein to the contrary notwithstanding, the Borrower shall not, at any
time, be obligated to pay to any assignee or participant of any interest of any
Lender, under Section 2.11, 2.13, 2.15 or 10.4, any sum in excess of the sum
which if the Borrower would not at the time of such assignment have been
obligated to pay to such assignor Lender any such amount in respect of such
interest had such assignment not been effected or had such participation not
been sold.
(h) Notwithstanding the foregoing provisions of this Section 10.7, the
aggregate Commitments and Loans of (i) Chase shall be at least equal to that of
any other Lender, (ii) Bankers Trust Company shall be at least equal to that of
any other Lender, (iii) NationsBank, N.A. shall be at least equal to that of any
other Lender and (iv) Wells Fargo Bank, National Association shall be at least
equal to that of any other Lender; provided that, (i) if an Event of Default
exists, Chase, Bankers Trust Company, NationsBank, N.A. and/or Wells Fargo Bank,
National Association may assign all or any portion of their respective
Commitments and Loans and (ii) if
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<PAGE> 120
Chase ceases to be Administrative Agent for any reason, Chase may assign all or
any portion of their respective Commitments and Loans.
10.8. Governing Law; Severability. This Agreement and the Notes and the
rights and obligations of the parties hereto and thereto shall be governed by,
and construed and interpreted in accordance with, the law of the State of New
York. Wherever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of
this Agreement.
10.9. Submission to Jurisdiction; Service of Process. (a) Any legal
action or proceeding with respect to this Agreement or the Notes or any document
related thereto may be brought in the courts of the State of New York or of the
United States of America for the Southern District of New York, and, by
execution and delivery of this Agreement, the Borrower hereby accepts for itself
and in respect of its property, generally and unconditionally, the jurisdiction
of the aforesaid courts. The parties hereto hereby irrevocably waive any
objection, including, without limitation, any objection to the laying of venue
or based on the grounds of forum non conveniens, which any of them may now or
hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions.
(b) The Borrower irrevocably consents to the service of process of any
of the aforesaid courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the Borrower
at its address provided herein.
(c) Nothing contained in this Section 10.9 shall affect the right of
the agent, any Lender or any holder of a Note to serve process in any other
manner permitted by law or commence legal proceedings or otherwise proceed
against the Borrower in any other jurisdiction.
10.10. Section Titles. The Section titles contained in this Agreement
are and shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreement between the parties hereto.
10.11. Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
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<PAGE> 121
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
10.12. Entire Agreement. This Agreement, together with all of the other
Loan Documents and all certificates and documents delivered hereunder or
thereunder, and the agreements referred to in Section 2.4(b) embody the entire
agreement of the parties and supersedes all prior agreements and understandings
relating to the subject matter hereof.
10.13. Confidentiality. Each Lender and the Administrative Agent agree
to keep information obtained by it pursuant hereto and the other Loan Documents
confidential and agrees that it will only use such information in connection
with the transactions contemplated by this Agreement and not disclose any of
such information other than (i) to such Lender's or the Administrative Agent's,
as the case may be, Affiliates, employees, representatives and agents who are or
are expected to be involved in the evaluation of such information in connection
with the transactions contemplated by this Agreement and who are advised of the
confidential nature of such information, (ii) to the extent such information
presently is or hereafter becomes available to such Lender or the Administrative
Agent, as the case may be, on a non-confidential basis from a source other than
the Borrower, (iii) to the extent disclosure is required by law, regulation or
judicial order or requested or required by bank regulators or auditors, or (iv)
to assignees or participants or potential assignees or participants who agree to
be bound by the provisions of this sentence.
10.14. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO WAIVES ANY
RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN
STATEMENT OR ACTION OF ANY PARTY HERETO.
10.15. Joint and Several Obligations. Unless the context clearly
indicates otherwise each covenant, agreement, undertaking, condition or other
matter stated herein as a covenant, agreement, undertaking or matter involving
the Borrower shall be jointly and severally binding upon each of the parties
comprising Borrower.
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<PAGE> 122
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
FELCOR SUITE HOTELS, INC.
By:/s/ RANDALL L. CHURCHEY
-----------------------------------------
Name: Randall L. Churchey
Title: Senior Vice President &
Chief Financial Officer
FELCOR SUITES LIMITED PARTNERSHIP
By: FelCor Suite Hotels, Inc. its general partner
By:/s/ RANDALL L. CHURCHEY
-----------------------------------------
Name: Randall L. Churchey
Title: Senior Vice President &
Chief Financial Officer
THE CHASE MANHATTAN BANK, as Administrative Agent
By:/s/ THOMAS H. KOZIARK
-----------------------------------------
Name: Thomas H. Koziark
Title: Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 123
BANKERS TRUST COMPANY, as Documentation
Agent
By: /s/ GARRETT W. THELANDER
-----------------------------------------
Name: Garrett W. Thelander
Title: Vice President
NATIONSBANK, N.A., as Documentation Agent
By:/s/ M. DAVID HOWARD
-----------------------------------------
Name: M. David Howard
Title: Vice President
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Documentation Agent
By:/s/ KENT HOWARD
-----------------------------------------
Name: Kent Howard
Title: Vice President
<PAGE> 124
Lenders
THE CHASE MANHATTAN BANK
By:/s/ THOMAS H. KOZIARK
-----------------------------------------
Name: Thomas H. Koziark
Title: Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 125
WELLS FARGO BANK, NATIONAL ASSOCIATION
By:/s/ KENT HOWARD
-----------------------------------------
Name: Kent Howard
Title: Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 126
BANK ONE, TEXAS, N.A.
By:/s/ EDDIE HODGES
-----------------------------------------
Name: Eddie Hodges
Title: Assistant Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 127
BANKBOSTON, N.A.
By: /s/ JEFFREY L. WARWICK
-----------------------------------------
Name: Jeffrey L. Warwick
Title: Director
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 128
PNC BANK, NATIONAL ASSOCIATION
By:/s/ TERRI L. ROBISON
-----------------------------------------
Name: Terri L. Robison
Title: Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 129
NATIONSBANK, N.A.
By:/s/ M. DAVID HOWARD
-----------------------------------------
Name: M. David Howard
Title: Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 130
THE FIRST NATIONAL BANK OF CHICAGO
By:/s/ MICHAEL A. PARISI
-----------------------------------------
Name: Michael A. Parisi
Title: Corporate Banking Officer
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 131
AMSOUTH BANK OF ALABAMA
By:/s/ [ILLEGIBLE]
-----------------------------------------
Name: [ILLEGIBLE}
Title: Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 132
SOCIETE GENERALE, SOUTHWEST AGENCY
By:/s/ THOMAS K. DAY
-----------------------------------------
Name: Thomas K. Day
Title: Director
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 133
CREDIT LYONNAIS NEW YORK BRANCH
By:/s/ JOSEPH A. ASCIOLLA
-----------------------------------------
Name: Joseph A. Asciolla
Title: Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 134
BANK OF MONTREAL(CHICAGO BRANCH)
By:/s/ CATHERINE SAHAGIAN MOUSSEAU
-----------------------------------------
Name: Catherine Sahagian Mousseau
Title: Director
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 135
CIBC INC.
By: CIBC OPPENHEIMER CORP.
By:/s/ DEAN J. DECKER
-----------------------------------------
Name: Dean J. Decker
Title: Executive Director
CIBC Oppenheimer Corp., AS AGENT
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 136
THE SUMITOMO BANK, LIMITED
By:/s/ YASUO MIYAZAWA
-----------------------------------------
Name: Yasuo Miyazawa
Title: Joint General Manager
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 137
THE BANK OF NOVA SCOTIA
By:/s/ BRUCE G. FERGUSON
-----------------------------------------
Name: Bruce G. Ferguson
Title: Senior Relationship Manager
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 138
BANKERS TRUST COMPANY
By:/s/ GARRETT W. THELANDER
-----------------------------------------
Name: Garrett W. Thelander
Title: Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 139
CHANG HWA COMMERCIAL BANK, LTD., a New York
Branch
By:/s/ WAN-TU YEH
-----------------------------------------
Name: Wan-Tu Yeh
Title: Vice President & General Manager
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 140
CREDITANSTALT CORPORATE FINANCE, INC.
By:/s/ WILLIAM E. MCCOLLUM, JR. By:/s/ SCOTT KRAY
------------------------------ ------------------------------
Name: William E. McCollum, Jr. Name: Scott Kray
title: Senior Associate Title: Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 141
DEUTSCHE BANK AG
New York Branch and/or Cayman Islands Branch
By:/s/ HANS-JOSEF THIELE
-----------------------------------------
Name: Hans-Josef Thiele
Title: Director
By:/s/ JOEL MAKOWSKY
-----------------------------------------
Name: Joel Makowsky
Title: Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 142
ERSTE BANK
By:/s/ JOHN S. RUNNION
-----------------------------------------
Name: John S. Runnion
Title: First Vice President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 143
METROPOLITAN LIFE INSURANCE COMPANY
By:/s/ ROBERT N. JENKINS
-----------------------------------------
Name: Robert N. Jenkins
Title: Vice-President
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 144
OCTAGON LOAN TRUST
By: Octagon Credit Investors
By:/s/ JAMES P. FERGUSON
-----------------------------------------
Name: James P. Ferguson
Title: Managing Director
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
<PAGE> 145
SCHEDULE I
COMMITMENTS
<TABLE>
<CAPTION>
REVOLVING CREDIT TERM LOAN
LENDER COMMITMENT COMMITMENT
- ---------------------------------- ---------------- ------------
<S> <C> <C>
The Chase Manhattan Bank, $75,000,000 $109,000,000
Administrative Agent and Arranger
Bankers Trust Company, $75,000,000 $25,000,000
Co-Arranger
NationsBank, N.A., $75,000,000 $25,000,000
Co-Arranger
Wells Fargo Bank, Co-Arranger $75,000,000 $25,000,000
AmSouth Bank of Alabama $35,000,000 $5,000,000
Bank of Montreal (Chicago Branch) $40,000,000 $-0-
The Bank of Nova Scotia $60,000,000 $-0-
Bank One, Texas N.A. $30,000,000 $-0-
Chang Hwa Commercial Bank $12,000,000 $8,000,000
CIBC Inc. $60,000,000 $-0-
Credit Lyonnais New York Branch $60,000,000 $-0-
Creditanstalt $35,000,000 $-0-
Deutsche Bank AG $20,000,000 $-0-
Erste Bank $15,000,000 $-0-
The First National Bank of Boston $30,000,000 $-0-
</TABLE>
I
<PAGE> 146
<TABLE>
<CAPTION>
REVOLVING CREDIT TERM LOAN
LENDER COMMITMENT COMMITMENT
- ---------------------------------- ---------------- ------------
<S> <C> <C>
The First National Bank of Chicago $40,000,000 $-0-
Metlife $-0- $25,000,000
PNC Bank, National Association $33,000,000 $-0-
Societe Generale, Southwest $60,000,000 $10,000,000
Agency
The Sumitomo Bank, Limited $20,000,000 $-0-
Octagon Loan Trust $-0- $18,000,000
TOTALS $850,000,000 $250,000,000
</TABLE>
II
<PAGE> 147
SCHEDULE II
APPLICABLE LENDING OFFICES AND
ADDRESSES FOR NOTICES
<TABLE>
<CAPTION>
LENDER DOMESTIC LENDING OFFICE AND ADDRESS EURODOLLAR LENDING OFFICE
FOR NOTICES
- ----------- ----------------------------------- --------------------------------
<S> <C> <C>
Chase 1 Chase Manhattan Plaza 1 Chase Manhattan Plaza
8th Floor 8th Floor
New York, NY 10081 New York, NY 10081
Attention: Linda Rodriguez Attention: Linda Rodriguez
Telecopy: (212) 552-5701 Telecopy: (212) 552-5701
Bankers 130 Liberty Street 130 Liberty Street
Trust 25th Floor New York, NY 10006
Company New York, New York 10006 Attn: Wendy Williams
Attn: Caryl Mooney Telecopy: (212) 250-7351
Telecopy: (212) 669-0732
Nations 901 Main, 51st Floor 901 Main, 51st Floor
Bank Dallas, TX 75202 Dallas, TX 75224
Attn: David Howard Attn: Mary Burnette
Telecopy: (214) 508-0085 Telecopy: (2140 508-1571
Wells Fargo 12377 Merit Drive, Suite 300 2120 East Park Place, Suite 100
Dallas, TX 75251 El Segundo, CA 90245
Attention: Kent Howard Attention: Match Fundings
Telecopy:(972) 386-4723 Administrator
Telecopy:(310) 335-1014
AmSouth P.O. Box 11007 P.O. Box 11007
Bank of Brimingham, AL 35288 Brimingham, AL 35288
Alabama Attn: Buddy Sharbel Attn: Buddy Sharbel
Telecopy: (205) 326-4075 Telecopy: (205) 326-4075
Bank of 115 South LaSalle Street 115 South LaSalle Street
Montreal Chicago, IL 60603 Chicago, IL 60603
(Chicago Attn: David Mazujian Attn: Debra Sandt
Branch) Telecopy: (312) 750-4352 Telecopy: (312) 750-4345
</TABLE>
III
<PAGE> 148
<TABLE>
<CAPTION>
LENDER DOMESTIC LENDING OFFICE AND ADDRESS EURODOLLAR LENDING OFFICE
FOR NOTICES
- ----------- ----------------------------------- --------------------------------
<S> <C> <C>
The Bank Real Estate Banking 600 Peachtree St., N.E.
of Nova One Liberty Plaza Suite 2700
Scotia New York, NY 10006 Atlanta, GA 30308
Attn: Bruce Ferguson Attn: Craig Subryan
Telecopy: (212) 225-5166 Telecopy: (404) 888-8998
Bank One Bank One, Texas Bank One, Texas
Texas 1717 Main Street, 4th Floor 1717 Main Street, 4th Floor
Dallas, TX 75201 Dallas, TX 75201
Attention: Eddie Hodges Attention: Eddie Hodges
Telecopy: (214) 290-2275 Telecopy: (214) 290-2275
Chang Hwa One World Trade Center One World Trade Center
Commercial 32nd Floor Suite 3211 32nd Floor Suite 3211
Bank New York, NY 10048 New York, NY 10048
Attn: Teddy Mou Attn: Teddy Mou
Telecopy: 212-390-0120 Telecopy: 212-390-0120
CIBC Inc. 2727 Paces Road, Suite 1200 2727 Paces Road, Suite 1200
Atlanta, GA 30339 Atlanta, GA 30339
Attn: Kim Perrone Attn: Kim Perrone
Telecopy: (770) 319-4950 Telecopy: (770) 319-4950
Creditanstalt 2 Ravinia Drive 2 Ravinia Drive
Suite 1680 Suite 1680
Atlanta, GA 30346 Atlanta, GA 30346
Attn: Scott Kray Attn: Scott Kray
Telecopy: (770) 390-1851 Telecopy: (770) 390-1851
Credit 1301 Avenue of the Americas 1301 Avenue of the Americas
Lyonnais New York, NY 10019 New York, NY 10019
Attn: Jan Hazelton Attn: Hotel Finance/18th
Telecopy: (212) 261-7540 Floor
Telecopy: (212) 261-7890
Deutsche 31 West 52nd Street 31 West 52nd Street
Bank AG New York, NY 10019 New York, NY 10019
Attn: Stephan Wiedemann Attn: Stephan Wiedemann
Telecopy: (212) 469-8212 Telecopy: (212) 469-8212
</TABLE>
IV
<PAGE> 149
<TABLE>
<CAPTION>
LENDER DOMESTIC LENDING OFFICE AND ADDRESS EURODOLLAR LENDING OFFICE
FOR NOTICES
- ----------- ----------------------------------- --------------------------------
<S> <C> <C>
Erste Bank 280 Park Avenue 280 Park Avenue
West Building West Building
New York, NY 10017 New York, NY 10017
Attn: Paul Judicke Attn: Paul Judicke
Telecopy: (212) 984-5627 Telecopy: (212) 984-5627
First 115 Perimeter Ctr Place, Suite 500 115 Perimeter Ctr Place, Suite 500
National Atlanta, GA 30346 Atlanta, GA 30346
Bank of Att: Steven P. Selbo Attn: Jeanette Streander
Boston Telecopy:(770) 390-8434 Telecopy:(770) 390-8434
The First One First National Plaza One First National Plaza
National Suite 1051 Suite 1051
Bank of Chicago, IL 60607 Chicago, IL 60607
Chicago Attn: Rebecca McCloskey Attn: Ernest M. Misioria
Telecopy: (312) 732-1117 Telecopy: (312) 732-1117
MetLife 200 Park Avenue 200 Park Avenue
10th Floor 10th Floor
New York, NY New York, NY
Attn: Tara Innes Attn: Tara Innes
Telecopy: (212) 578-2927 Telecopy: (212) 578-2927
PNC Bank, One PNC Plaza, P1-POPP-19-2 One PNC Plaza, P1-POPP-192
National 249 Fifth Avenue 249 Fifth Avenue
Assoc. Pittsburgh, PA 15222-2702 Pittsburgh, PA 15222-2702
Att: Jan Dotchin Att: Jan Dotchin
Telecopy: (412) 768-5754 Telecopy: (412) 768-5754
Societe 2001 Ross Avenue 2001 Ross Avenue
Generale, Suite 4900 Suite 4900
Southwest Dallas, TX 75201 Dallas, TX 75201
Agency Attn: Carina Huynh Attn: Martha Fleming
Telecopy: (214) 979-2727 Telecopy: (214) 979-2727
</TABLE>
V
<PAGE> 150
<TABLE>
<CAPTION>
LENDER DOMESTIC LENDING OFFICE AND ADDRESS EURODOLLAR LENDING OFFICE
FOR NOTICES
- ----------- ----------------------------------- --------------------------------
<S> <C> <C>
The Sears Tower Sears Tower
Sumitomo Suite 4800 Suite 4800
Bank Limited 233 South Wacker Drive 233 South Wacker Drive
Chicago, IL 60606 Chicago, IL 60606
Attn: Tom Batterham Attn: Tom Batterham
Telecopy: (312) 876-6436 Telecopy: (312) 876-643
Octagon 380 Madison Avenue 380 Madison Avenue
Loan Trust New York, NY 10017 New York, NY 10017
Attn: Yalin Karadagon Attn: Yalin Karadagon
Telecopy: (212) 622-3797 Telecopy: (212) 622-3797
</TABLE>
VI
<PAGE> 1
EXHIBIT 10.17
AMENDED AND RESTATED
MASTER HOTEL AGREEMENT
THIS AMENDED AND RESTATED MASTER HOTEL AGREEMENT ("Agreement")
is made as of 3:00 p.m. Central Time on July 27, 1998, among Bristol Hotels &
Resorts, Inc., a Delaware corporation that intends to change its name to Bristol
Hotels & Resorts ("BHR"), FelCor Suite Hotels, Inc., a Maryland corporation that
intends to change its name to FelCor Lodging Trust Incorporated ("FelCor"),
FelCor Suites Limited Partnership, a Delaware limited partnership that intends
to change its name to FelCor Lodging Limited Partnership ("FSLP"), and each of
the affiliates thereof signing below.
RECITALS:
A. Bristol Hotel Company, a Delaware corporation ("Bristol Hotel
Company"), and FelCor have entered into an Agreement and Plan of Merger dated as
of March 23, 1998, (the "Merger Agreement") pursuant to which, inter alia, BHR
will be spun-off to the shareholders of Bristol Hotel Company, Bristol Hotel
Company will merge with and into FelCor (the "Merger") and, as a condition to
such Merger, the Lessors (as hereinafter defined) shall have leased the Existing
Hotels (as hereinafter defined) to Lessees (as hereinafter defined).
B. BHR, FelCor and FSLP are parties to that certain Master Hotel
Agreement dated as of May 29, 1998 (the "MHA"), pursuant to which the parties
have set forth certain rights and obligations with respect to the Existing
Hotels.
C. The parties desire to amend and restate the MHA in order to set
forth and clarify the terms and conditions on which Lessors will lease the
Existing Hotels to Lessees, and to reaffirm certain other agreements as set
forth herein.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree, and the MHA is hereby amended and
restated to read in its entirety, as follows:
1. Certain Definitions. As used in this Agreement, the following terms
have the meanings set forth in this Section or in the Section indicated. Unless
the context otherwise requires, (a) references to the singular shall include the
plural and vice versa, (b) references to gender shall
<PAGE> 2
include all genders, (c) references to designated "Sections" or other
subdivisions are references to the designated Sections or other subdivisions of
this Agreement, (d) all accounting terms not otherwise defined herein shall have
the meanings assigned to them in accordance with GAAP and, if applicable, the
Uniform System (as defined in the Percentage Leases), and (e) the words
"herein," "hereof," and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular Section or other
subdivision. CAPITALIZED TERMS USED AND NOT DEFINED HEREIN SHALL HAVE THE
RESPECTIVE MEANINGS, IF ANY, SET FORTH IN THE PERCENTAGE LEASES.
Affiliate--shall mean, with respect to any Person, any Person that,
directly or indirectly, controls or is controlled by or is under common control
with such Person, or any other Person that owns, beneficially, directly or
indirectly, fifty percent (50%) or more of the outstanding capital stock, shares
or equity interests of such Person. For the purposes of this definition,
"control" (including the correlative meanings of the terms "controlled by" and
"under common control with"), as used with respect to any entity shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such entity, through the ownership
of voting securities, partnership interests or other equity interests.
Affiliated Manager--shall mean an entity that is a manager of one of
the Hotels and an Affiliate of BHR or a Lessee.
Agreement--shall have the meaning set forth in the Preamble.
Closing Date--shall mean the effective date of the Merger.
Code--shall mean the Internal Revenue Code of 1986, as amended.
Credit Enhancement--shall mean an unconditional letter of credit in
form reasonably acceptable to FelCor, provided by Bankers Trust Company or any
other financial institution reasonably acceptable to FelCor for the benefit of
the applicable Lessor(s) and FelCor, or a guaranty in the form of the Guaranty
provided by BHR (or, if permitted by Lessor, other Affiliates of Lessee), or
other form of credit enhancement with respect to the Percentage Leases that is
reasonably acceptable to the applicable Lessor(s). The form of any Credit
Enhancement shall be subject to the reasonable approval of Lessor, and any
Credit Enhancement shall be subject to the reasonable approval of FelCor's REIT
tax counsel.
2
<PAGE> 3
Credit Enhancement Amount--shall mean the aggregate amount that is
currently available, (without material restriction) under all forms of Credit
Enhancement obtained by a Lessee, to make payments due under the Percentage
Leases to which it is a party.
Default by Lessee--shall have the meaning set forth in Section 10(a).
Existing Hotels--shall mean the Hotels listed on Exhibit A attached
hereto, as such Exhibit A is amended or supplemented from time to time by
written agreement between FelCor and BHR.
GAAP--shall mean, as of any date of determination, accounting
principles (a) set forth as generally accepted in then currently effective
Opinions of the Accounting Principles Board of the American Institute of
Certified Public Accountants, (b) set forth as generally accepted in then
currently effective Statements of the Financial Accounting Standards Board or
(c) that are then approved by such other entity as may be approved by a
significant segment of the accounting profession in the United States of
America. The term "consistently applied," as used in connection therewith, means
that the accounting principles applied are consistent in all material respects
to those applied at prior dates or for prior periods.
Guaranty--shall mean a Guaranty of a Percentage Lease substantially in
the form attached hereto as Exhibit C.
Hostile Change of Control--shall mean, at the relevant time, (i) any
event resulting in any "person" or "group" (within the meaning of Sections 13(d)
and 14(d) of the 1934 Act), other than United/Harvey Holdings, L.P. or any
Affiliate thereof, becoming the beneficial owner (as defined in Rules 13d-3 and
13d-5 under the 1934 Act) directly or indirectly, of more than fifty percent
(50%) of the total voting power of all classes of capital stock of BHR or, if
applicable, the ultimate parent ("Parent"), at the relevant time, of BHR or a
Lessee or an Affiliated Manager then outstanding and entitled to vote generally
in elections of directors ("Voting Stock") and such beneficial ownership was
acquired within a period of two (2) years following a tender offer by such
person (or any of its Affiliates) for shares of Voting Stock of such Parent or a
solicitation of proxies with respect to Voting Stock of such Parent by such
person, if, in either case, such tender offer or solicitation of proxies was not
approved by a majority of the Board of Directors of such Parent in office at the
time such tender offer or proxy solicitation was commenced, or (ii) a majority
of the Board of Directors of the Parent, at the relevant time, being constituted
of individuals who were elected pursuant to a
3
<PAGE> 4
solicitation of proxies with respect to Voting Stock of such Parent, if such
solicitation of proxies was not approved by a majority of the Board of Directors
of such Parent in office at the time such solicitation of proxies was commenced.
Hotels--shall mean, with respect to any pertinent date, the Existing
Hotels and any New Hotels which are then currently leased by a Lessor to a
Lessee and, with respect to any pertinent period, the Existing Hotels and any
New Hotels, that are leased by a Lessor to a Lessee at any time during such
period.
Lessee--shall mean each of the direct or indirect subsidiaries of BHR
that is a lessee of a Hotel under a Percentage Lease, including, without
limitation, those listed under the heading "Lessee" on the signature pages of
this Agreement that have entered into the Percentage Leases effective as of the
Closing Date.
Lessee Income Before Corporate Overhead--shall mean, for any period,
the amount (not less than zero) by which the Gross Revenues of a Hotel for such
period exceed the sum of (i) the Gross Operating Expenses for such period for
which Lessee is responsible under the Percentage Lease covering such Hotel
(other than management fees payable to any Affiliated Manager) and (ii) the Rent
payable to Lessor for such period under such Percentage Lease.
Lessor--shall mean any one of the owners of the Hotels that is an
Affiliate of FelCor from and after the Closing Date and that is a lessor of a
Hotel under a Percentage Lease, including, without limitation, those listed
under the heading "Lessor" on the signature pages of this Agreement.
Liquid Assets Amount--shall mean, for any Person, the sum of (i) the
Person's and the proportionate share of its Subsidiaries' Working Capital and
(ii) the lesser of the aggregate GAAP book value and the aggregate current fair
market value of such Person's assets, and the proportionate share of its
Subsidiaries' assets, of the following types: (A) any contracts to lease or
manage hotels or other hospitality properties owned by Persons other than
Lessor, Lessee and their Affiliates, (B) any hotels, hospitality properties or
other marketable real property owned by such Person and its Subsidiaries, and
(C) to the extent reasonably acceptable to Lessor, any other income-producing or
readily marketable tangible property, equity interests, securities or other
investments owned by such Person and its Subsidiaries. In the case of assets
described in clause (ii) of the preceding sentence, both the GAAP book value and
the current market value of any such assets shall be
4
<PAGE> 5
determined net of any indebtedness or liabilities (including such Person's
liability under any Guaranty) not expressly or structurally subordinated to the
payment of Rent on terms reasonably acceptable to Lessor. Any disputes regarding
the fair market value of an asset will be resolved in accordance with the
appraisal procedures set forth in Article 33 of the Percentage Leases.
Liquid Net Worth--shall mean the lesser of (i) the sum of (A) the Net
Worth of a Lessee and (B) the Lessee's Credit Enhancement Amount, and (ii) the
sum of (C) the Lessee's Liquid Assets Amount and (D) the Lessee's Credit
Enhancement Amount, as reasonably approved by FelCor's REIT tax counsel, which
Liquid Net Worth is required to be not less than $30,000,000 as of the Closing
Date.
Merger--shall have the meaning set forth in the Preamble.
Merger Agreement--shall have the meaning set forth in the Preamble.
Minimum Liquid Net Worth--shall mean, as of any pertinent date,
aggregate Liquid Net Worth for a Lessee (or, where appropriate, all of the
Lessees in the aggregate) equal to fifteen percent (15%) of the Rent projected
(budgeted) to be paid by such Lessee (or, where appropriate, all Lessees) under
approved Revenue Budgets prepared in conformity with the Percentage Leases
during the then current calendar year (or as otherwise projected by FelCor and
BHR in the case of 1998 and the final year of the Term, including any extension
thereof), as adjusted from time to time as set forth below. To the extent that a
Lessee leases one or more New Hotels from Lessor, the Minimum Liquid Net Worth
requirement for the respective Lessee (for the remainder of the then current
calendar year or until another adjustment is required hereunder, whichever first
occurs) will be increased as a result of each such New Hotel by an amount equal
to fifteen percent (15%) of the Percentage Rent projected to be paid during the
first twelve (12) months of the Percentage Lease for such New Hotel. In
addition, to the extent that the Percentage Lease for any Hotel is terminated or
expires, the Minimum Liquid Net Worth requirement with respect to the respective
Lessee will be reduced (for the remainder of the then current calendar year or
until another adjustment is required hereunder, whichever first occurs) by the
amount of the Minimum Liquid Net Worth requirement attributable to such Hotel.
Each Lessee's allocable Minimum Liquid Net Worth shall be determined based on
the Rent projected to be paid by such Lessee.
5
<PAGE> 6
Net Economic Benefit--shall mean, with respect to a proposed,
terminated or replacement Percentage Lease or a replacement management agreement
hereunder, the net present value of the Lessee Income Before Corporate Overhead
that is projected to be earned by the related Lessee or Affiliate of BHR during
the remaining term of such Percentage Lease or management agreement (including,
in the case of a proposed, terminated or replacement Percentage Lease, the First
Extension, regardless of whether the Lessee has exercised its option with
respect to such First Extension, and the Second Extension if, but only if, the
Lessee has properly exercised its option with respect to such Second Extension
prior to the date on which the Lessor provides notice to the Lessee of an
anticipated Percentage Lease termination), calculated using an agreed discount
rate based upon a then market discount rate. In addition, the parties shall make
any mutually agreeable adjustments to the foregoing calculation that are
necessary or appropriate to assure that the calculation properly reflects the
economic value of the Percentage Lease or management agreement to the Lessee or
Affiliate of BHR.
Net Worth--shall mean the excess of total assets over total
liabilities, total assets and total liabilities each to be determined in
accordance with GAAP, excluding, however, from the determination of total
assets: (a) unamortized goodwill, organizational expenses, research and
development expenses, trademarks, trade names, copyrights, patents, patent
applications, and other similar intangibles; (b) all deferred charges that are
required to be capitalized in accordance with GAAP or unamortized debt discounts
and expense; (c) treasury stock; (d) securities which are not readily
marketable, (e) any write-up in the book value of any asset resulting from a
revaluation thereof, other than as recognized pursuant to the terms of this
Agreement; (f) the Percentage Leases; and (g) any items (other than assets
included in Liquid Assets Amount) that are not included in clauses (a) through
(f) above that are treated as intangibles in conformity with GAAP.
New Hotels--shall mean the hotels (if any) other than the Existing
Hotels that, as of any pertinent date, are then currently leased by a Lessor to
a Lessee and have not been excluded from treatment as a New Hotel under this
Agreement as provided in Section 4 below.
Non-Consent Hotels--shall mean any Hotel as to which:
(i) with respect to an Existing Hotel, the Ground Lessor or
Mortgagee refuses to give any required consent to the subjecting of such Hotel
to a proposed Percentage Lease (or any other
6
<PAGE> 7
required consent) in connection with the Merger and neither BHR nor an Affiliate
of BHR is retained to manage, or offered the right to manage, the Hotel pursuant
to a management agreement providing the hotel manager with substantially the
same (or greater) projected Net Economic Benefit as would have a Percentage
Lease entered into pursuant to this Agreement; provided, however, that any such
Hotel shall not be deemed a Non-Consent Hotel in the event that the Ground Lease
or Lessor's interest therein is terminated by the Ground Lessor or Mortgagee as
a result of the failure to obtain any such consent to (or in connection with)
the Merger or a Percentage Lease of such Hotel; or
(ii) With respect to any Hotel, Lessor hereafter defaults
under the Mortgage (other than as a result of a default by Lessee under the
Percentage Lease) and the Mortgagee, its designee or a purchaser at foreclosure
acquires the Hotel (by foreclosure or transfer in lieu of foreclosure) free of
the interest of Lessee therein and does not retain BHR or an Affiliate thereof
to manage the Hotel.
1933 Act--shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
1934 Act--shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
Percentage Lease--shall mean, with respect to one or more Existing
Hotels, a lease entered into between Lessor and Lessee on or about the date
hereof with respect to such Hotel substantially in the form executed of even
date herewith with respect to the Existing Hotels and, with respect to each New
Hotel, any lease as entered into between a Lessor and a Lessee pursuant to
Section 4 hereof.
Post-Default Operating Expenses--shall mean the Gross Operating
Expenses of continuing to operate a Hotel under a Percentage Lease as to which
an Event of Default has occurred and is continuing, to the extent incurred prior
to the effective date of termination of such Percentage Lease by the Lessor,
other than amounts (including management fees) payable to Affiliates of Lessee;
provided, however, that Post-Default Operating Expenses may include (i)
reasonable out-of-pocket Gross Operating Expenses reimbursable to such Affiliate
and (ii) the portion of any monthly management fee due by Lessee to an
Affiliated Manager in an amount not in excess of one and one-half percent (1.5%)
of the then current monthly amount of Gross Revenues of the Hotel.
7
<PAGE> 8
Recognition Agreement--shall mean any agreement entered into between
FelCor and/or the Lessors, on the one hand, and any senior lender to BHR and/or
the Lessees, on the other hand, providing such senior lender with notice of and
an opportunity to cure defaults by Lessee and other commercially reasonable
provisions reasonably acceptable to FelCor designed to protect the interests of
such senior lender.
REIT Restrictions--shall have the meaning set forth in Section 8 below
Rent--shall mean the rent payable under each Percentage Lease
(including both Base Rent and Percentage Rent).
Sale Hotels--Any Existing Hotel heretofore identified by BHR and FelCor
as not properly within FelCor's strategic target portfolio and therefore likely
to be sold within a reasonable time following the Closing Date rather than
renovated by Lessor, as listed on Exhibit B attached hereto.
Short Term Sale Hotels--Any Sale Hotel that has been owned by the
related Lessor, as of the effective date of the Termination Fee Payment Event,
for less than eighteen (18) months following the Commencement Date.
SEC--shall mean the U.S. Securities and Exchange Commission.
Termination Fee--shall mean all amounts paid or credited under Section
3(e) below.
Termination Fee Base Amount--shall mean (i) an amount equal to
seventy-five percent (75%) of the Lessee Income Before Corporate Overhead for an
Existing Hotel (other than a Short-Term Sale Hotel) for the twelve (12) full
calendar months prior to the effective date of the Termination Fee Payment Event
with respect to such Existing Hotel; (ii) an amount equal to fifty percent (50%)
of the Lessee Income Before Corporate Overhead for a Short-Term Sale Hotel for
the twelve (12) full calendar months prior to the effective date of the
Termination Fee Payment Event with respect to such Short-Term Sale Hotel; and
(iii) an amount equal to one hundred percent (100%) of the Lessee Income Before
Corporate Overhead for a New Hotel for the twelve (12) full calendar months
prior to the effective date of the Termination Fee Payment Event with respect to
such New Hotel. In the case of a Hotel that has been owned by the related Lessor
for less than twelve (12) full calendar months following the Commencement Date
and prior to the effective date of the Termination Fee Payment Event, the Lessee
Income Before Corporate Overhead for such Hotel for the twelve-month measuring
period will be determined on a pro forma basis as though the related Percentage
Lease had
8
<PAGE> 9
been in effect for the entire measuring period. Notwithstanding the foregoing,
no Termination Fee shall be payable with respect to the sale of the Holiday Inn
Express - Atlanta Northeast (#257), which is scheduled for closing in August,
1998.
Termination Fee Payment Event--shall mean:
(i) a sale or other transfer by Lessor of a Hotel (other than
a Short-Term Sale Hotel) as to which (A) the Percentage Lease covering such
Hotel is to be terminated by Lessor solely as a result of such sale or other
transfer as permitted by the Percentage Lease, and (B) neither any Lessee nor
any Affiliate of BHR shall continue to be (or become) the lessee or manager of
such Hotel or, with respect to the Sale Hotels (other than Short-Term Sale
Hotels), one or more other hotels offered by FelCor in substitution therefor and
accepted by a Lessee or another Affiliate of BHR in the exercise of its sole
discretion pursuant to a replacement Percentage Lease and/or management
agreement, in either case, projected to provide equal or greater Net Economic
Benefit to such Lessee or other Affiliate of BHR; or
(ii) a sale or other transfer by Lessor of a Short-Term Sale
Hotel as to which (A) the Percentage Lease covering such Hotel is to be
terminated by Lessor solely as a result of such sale or other transfer as
permitted by the Percentage Lease, and (B) neither any Lessee nor any Affiliate
of BHR shall continue to be (or become) the lessee or manager of such Short-Term
Sale Hotel or one or more other hotels offered by FelCor in substitution
therefor (at any time within eighteen (18) months following the Termination Fee
Payment Event), and accepted by a Lessee or another Affiliate of BHR (in the
exercise of their reasonable discretion if not accepted prior to the sale or
other transfer of such Short-Term Sale Hotel) pursuant to a replacement
Percentage Lease and/or management agreement, in either case, projected to
provide equal or greater Net Economic Benefit to such Lessee or other Affiliate
of BHR; provided, however, that the Percentage Leases for the Four Points,
Leominster, Massachusetts, the Meadowlands Hilton, Secaucus, New Jersey, and the
Holiday Inn Select, University Center, Pittsburgh, Pennsylvania, each a New
Hotel recently purchased by Affiliates of FelCor, shall be deemed to be
accepted, replacement Percentage Leases hereunder with respect to any Percentage
Leases for Short-Term Sale Hotels that are terminated as a result of the sale of
the related Short-Term Sale Hotel, to the extent that the Net Economic Benefit
of the Percentage Lease associated with the Short-Term Sale Hotel that is sold,
when aggregated with the
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<PAGE> 10
Net Economic Benefit of the Percentage Leases associated with Short-Term Sale
Hotels that previously have been sold, does not exceed the aggregate Net
Economic Benefit of the Percentage Leases associated with those three (3)
replacement New Hotels; or
(iii) an event by which an Existing Hotel shall become a
Non-Consent Hotel, unless any Lessee or other Affiliate of BHR shall become the
lessee or manager of another hotel offered by FelCor (or the Mortgagee, its
designee or a purchaser at foreclosure or transfer in lieu of foreclosure of the
Hotel) in substitution therefor, and accepted by a Lessee or another Affiliate
of BHR in the exercise of its sole discretion, pursuant to a replacement
Percentage Lease and/or management agreement, in either case, projected to
provide equal or greater Net Economic Benefit to such Lessee or other Affiliate
of BHR.
Transfer--(i) any merger, sale of the stock of any Transferor, or sale,
transfer or conveyance of all or substantially all of the assets of any
Transferor if, as a result thereof, Transferor or any surviving entity or
purchaser of the assets of Transferor (each, the "Transferee") would cease to be
controlled by BHR or (ii) any event resulting in a "person" or "group" (within
the meaning of Sections 13(d) and 14(d) of the 1934 Act), other than
United/Harvey Holdings, L.P. or any Affiliate thereof, becoming the beneficial
owner (as defined in Rules 13d-3 and 13d-5 under the 1934 Act) directly or
indirectly, of more than fifty percent (50%) of the Voting Stock of BHR or, if
applicable, the Parent of BHR, or a Lessee or an Affiliated Manager, or (iii)
any sale or assignment of the leasehold interest in any of the Percentage Leases
to any third party that is not an Affiliate of BHR.
Transferor--shall mean any one or more of BHR, the Parent of BHR, a
Lessee, or an Affiliated Manager involved in a transaction that will constitute
a Transfer.
Working Capital--shall mean the excess of a Lessee's current assets
over such Lessee's current liabilities, both as determined in accordance with
GAAP.
2. Effective Date. All of the terms and conditions of this Agreement
shall become effective upon the Closing Date. The effectiveness of this
Agreement is conditioned upon the occurrence of Closing under the Merger
Agreement. If the condition to the effectiveness of this Agreement described
above has not been satisfied on or before the date three (3) months after the
date of this Agreement, this Agreement shall be null and void, subject to the
rights of the parties at
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law or in equity if the failure of such conditions to occur is the result of the
default of any party hereto.
3. Execution of Percentage Leases; Computation of Rent; Basic
Assumptions; Contemplated Renovations; SPE Financings; Termination Payments.
(a) Execution of Percentage Leases. Prior to the Closing Date,
Lessors and Lessees shall execute and deliver the Percentage Leases, pursuant to
which the Existing Hotels shall be leased by a Lessor to a Lessee.
(b) Computation of Rent; Basic Assumptions. The Base Rent and
Percentage Rent for each Percentage Lease of an Existing Hotel has been
reasonably agreed by Lessors and Lessees in good faith. The intent of the
parties is for the aggregate of Base Rent and Percentage Rent for all Existing
Hotels for the years 1998, 1999 and 2000 to be approximately equal to 95% of the
forecast (utilized by FelCor and BHR as the basis for negotiating the Merger) of
aggregate Lessee Income Before Corporate Overhead, minus Lessees' corporate
overhead ("Splitable Income") of Lessees from such Existing Hotels; provided,
however, that to the extent that the actual performance of the Existing Hotels
for such period(s) deviates from such forecasted Splitable Income, the terms of
the Percentage Leases as written will prevail and no adjustment will be made to
the Rent solely as a result of any such deviation. Notwithstanding the terms of
each Percentage Lease, aggregate Rent thereunder for the month of August 1998
(in the amount of approximately $10.9 million) shall be due and payable on or
before February 28, 1999, together with interest on the outstanding amount of
such deferred Rent at a floating rate of interest equal to LIBOR plus 150 basis
points; provided, however, that Lessees may only prepay such amount upon at
least two (2) business days notice to Lessors, and in minimum payments of at
least $500,000.
For purposes of Section 3.6 of the Percentage Leases, the basic
assumptions underlying the computation of Base Rent and Percentage Rent are set
forth in this Section 3(b) above and in Schedule 1 attached hereto.
(c) Contemplated Renovations; Land Use Flexibility. The
Percentage Leases will require Lessors to be responsible for the completion of
certain contemplated renovations to Existing Hotels as generally set forth in
the budgets on Schedule 1 hereto, with the nature and timing of such renovations
to be agreed to between the parties in good faith. The parties agree that such
budgets
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are preliminary only and may be reasonably adjusted upwards or downwards, and/or
accelerated or delayed, following further review and analysis.
In addition, however, FelCor and BHR agree to cause Lessors and Lessees
to negotiate in good faith with respect to the exclusion (before or after the
execution of the Percentage Leases for the Existing Hotels) from the Leased
Property under any Percentage Lease of Land or Improvements not reasonably
necessary for, and directly related to, the operation of the Hotel at the time
of such determination ("Excess Realty"), which FelCor proposes to put to more
profitable use, redevelopment or disposition (such as, by example, but without
limitation, by the construction of a parking structure on Land used for surface
parking for a Hotel, in connection with which a portion of the Land may be sold
by Lessor as no longer reasonably necessary to the operation of the Hotel
following construction of such parking structure) as long as (1) the applicable
Lessor pays its share of any direct or indirect costs or expenses fairly
allocable to the Excess Realty (including, but not limited to, the cost of
utilities servicing both the leased property and the excess realty, the cost to
maintain and repair elevators, HVAC systems and other systems serving both the
Leased Property and the Excess Realty, and the cost of security, janitorial and
other services provided to both the Leased Property and the Excess Realty) and
enters into an expense allocation agreement if requested by the applicable
Lessee, and (2) Lessee is reasonably compensated for any detrimental effect upon
its Hotel operations or its Lessee Income Before Corporate Overhead as a result
of such use, redevelopment or disposition by Lessor, including, without
limitation, by an appropriate reduction in the Rent under such Percentage Lease
and/or the payment of a fee to Lessee.
(d) SPE Financings. If requested by FelCor or a Lessor, BHR
and each Lessee agree that it will cooperate, and will cause any New Financing
Lessees (defined below) to cooperate, in good faith to promptly form one or more
new entities which are wholly-owned by such Lessee and/or the general partner
and/or the parent of the general partnership of such Lessee (each, a "New
Financing Lessee"), to serve as the lessee for one or more Hotels designated by
FelCor, and will assign to the New Financing Lessee, and cause the New Financing
Lessee to assume, the Percentage Leases with respect to such Hotels, except with
respect to obligations accrued through the date of such assignment assumption.
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Lessee and any New Financing Lessee will (a) include in its
and/or its general partner's organizational documents, or promptly amend its
and/or its general partner's existing organizational documents to include,
provisions sufficient to qualify such entity as a single-purpose,
bankruptcy-remote entity (or a similar entity) as determined by Lessor's lender
with reference to rating agency requirements, (b) operate in accordance with
such provisions so as to qualify or continue to qualify as such a single
purpose, bankruptcy-remote entity (or a similar entity) and (c) reasonably
cooperate with FelCor and Lessor and the Lessor's lender in connection with the
foregoing, and with the Lessor's counsel, including with respect to such
counsel's legal opinion regarding the bankruptcy-remoteness and/or
non-consolidation of the Lessee or New Financing Lessee and/or its general
partner with any other persons or entities and other customary matters. Such
Lessor will pay Lessee's reasonable out-of-pocket costs incurred in connection
with this Section 3(d), including, without limitation, organizing or amending
the organizational documents of the New Financing Lessees and in obtaining such
legal opinions.
(e) Termination Fee Payments. In the event of the occurrence
of a Termination Fee Payment Event with respect to a Percentage Lease (the
"Terminated Lease"), the Lessor shall be obligated to pay (in the manner
described below) the Monthly Termination Payment (as defined below) to the
Lessee for the number of months remaining following the effective date of the
Termination Fee Payment Event (or, with respect to a Sale Hotel, any later date
permitted for commencement of monthly payments by Lessor hereunder) through (i)
in the case of a Sale Hotel, the end of the original Term of the Terminated
Lease or (ii) in the case of a Hotel other than a Sale Hotel, the end of the
First Extension of the Terminated Lease (regardless of whether the Lessee has
exercised its option with respect to such First Extension) or, if the Lessee has
properly exercised its option with respect to the Second Extension of the
Terminated Lease prior to the date on which the Lessor provides notice to the
Lessee of an anticipated Termination Fee Payment Event, the end of the Second
Extension of the Terminated Lease (the "Payment Period"). The "Monthly
Termination Payment" shall be an amount equal to one-twelfth (1/12) of the
amount of the Termination Fee Base Amount.
The amount of any Monthly Termination Payment or, at Lessor's option,
the entire Termination Fee Base Amount, shall be applied in accordance with this
paragraph. First, all or any
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portion of the Monthly Termination Payment (or the Termination Fee Base Amount,
as applicable) shall, at the Lessor's option, be applied first to past due Rent
under the Terminated Lease or any other Percentage Leases, without curing any
Event of Default that has occurred and is continuing thereunder, and each Lessee
hereby authorizes the offset of any Monthly Termination Payment (or the
Termination Fee Base Amount, as applicable) due against past due Rent under the
Terminated Lease or other Percentage Lease to which it is a party or under any
other Terminated Lease or other Percentage Lease with any Lessee, as determined
in the exercise of its sole discretion by the Lessor. Second, any remaining
Monthly Termination Payment then shall be applied to Rent due or to become due
(as it becomes due) under other Percentage Leases (with such Lessee or any other
Lessee) during the Payment Period.
Notwithstanding the foregoing, in the event of the termination
(in the same transaction or series of transactions) of a sufficient number of
Percentage Leases that the aggregate monthly amount owed to Lessee(s) for
Monthly Termination Payments is greater than the aggregate monthly amount of
Rent payable to Lessor(s) under the remaining Percentage Leases during the
applicable Payment Period(s), the aggregate amount of Monthly Termination
Payments that would have been paid over the remaining term(s) of the applicable
Payment Period(s) shall be discounted to net present value at an agreed
reasonable discount rate and such amount shall be paid to BHR or Lessee(s) in a
lump sum in satisfaction of all of Lessor(s) obligations with respect to such
aggregate Termination Fees, and Lessee(s) shall continue to pay Rent on all
remaining Percentage Leases, if any, as set forth therein.
4. Future Percentage Leases. FelCor and BHR hereby agree that, unless
otherwise agreed by FelCor and BHR in their sole discretion in connection with
the acquisition of a New Hotel, the form of Percentage Lease between Lessor and
Lessee with respect to each New Hotel shall be in substantially the form of the
Percentage Leases for the Existing Hotels; provided, however, that all economic
terms of such new Percentage Lease for a New Hotel shall be negotiated in good
faith by the parties at the time. In the event that FelCor or an Affiliate
acquires the "Bristol House" hotel in Dallas, Texas, it will offer a Lessee the
opportunity to enter into a Percentage Lease for such Hotel upon terms
negotiated in good faith by the parties at the time; provided, however, that
FelCor and its Affiliates shall have no obligation to offer any other hotels to
BHR or its Affiliates.
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5. Minimum Liquid Net Worth Requirements; Lessee Reporting Obligations;
Letter of Credit Adjustments; Limitations on Distributions.
(a) Liquid Net Worth. At all times during the Terms of the
Percentage Leases, the Lessees collectively shall maintain an aggregate Liquid
Net Worth in an amount at least equal to the Minimum Liquid Net Worth for all
Lessees. Furthermore, at all times during the Terms of the Percentage Leases
relating to a particular Lessee, such Lessee shall maintain a Liquid Net Worth
in an amount at least equal to such Lessee's allocable Minimum Liquid Net Worth.
(b) Lessee Reporting Obligations; Letter of Credit
Adjustments. Concurrently with (i) the delivery of all financial statements to
FelCor and Lessors pursuant to Section 7(a)(i) hereof, and (ii) the execution of
any Percentage Lease for any New Hotel (and, at Lessee's option, in connection
with the termination of any then existing Percentage Lease or at any other
time), each Lessee shall certify to FelCor and its REIT tax counsel as to (i)
the amount of its Liquid Net Worth and its then-applicable Minimum Liquid Net
Worth in a certificate signed by the chief financial officer, chief accounting
officer or treasurer of BHR and by such Lessee and (ii) the aggregate Liquid Net
Worth and Minimum Liquid Net Worth then applicable to the Lessees collectively
(a "Liquid Net Worth Certificate"). Each Lessee's Liquid Net Worth and Minimum
Liquid Net Worth shall be determined from time to time (x) from the most recent
Liquid Net Worth Certificate delivered by BHR and such Lessee, or (y) in the
absence of a timely Liquid Net Worth Certificate when required hereunder, as
reasonably determined (or estimated) by FelCor pending receipt of such Liquid
Net Worth Certificate. In the event that a letter of credit has been provided to
any Lessor as Credit Enhancement, then within ten (10) days after receipt of a
Liquid Net Worth Certificate, each applicable Lessor and Lessee agrees to
deliver a notice of reduction to the issuer of the letter of credit or take such
other action as any Lessee or Lessor may reasonably request in order to reduce
the amount of such letter of credit to such amount as BHR or such Lessee shall
request, which amount may not be less than that necessary to ensure that the
individual Lessee's or the Lessees' aggregate Liquid Net Worth is at least equal
to the individual Lessee's or the Lessees' aggregate Minimum Liquid Net Worth,
each as reflected on such Liquid Net Worth Certificate.
(c) Obligation of BHR to Supplement Liquid Net Worth. If, upon
any determination of Liquid Net Worth, the Liquid Net Worth of any Lessee (or
the Lessees collectively)
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is less than the then-applicable Minimum Liquid Net Worth, but Lessors are
prohibited by any Lessor's mortgage financing from exercising their rights under
Section 10(b) to terminate all Percentage Leases, BHR shall have the obligation,
to the extent of cash, cash equivalents and other liquid assets reasonably
available to BHR (as certified in writing by BHR to FelCor), to contribute (or
cause to be contributed) to such Lessee(s), promptly after written notice from
Lessor, additional cash, marketable securities or other assets that qualify for
the Liquid Assets Amount with a current fair market value (as of the date of
such contribution), or to provide additional Credit Enhancement, at least equal
to such deficiency in the Liquid Net Worth of such Lessee(s). Except as
expressly set forth in this Section 5(c), or in a Guaranty, BHR shall have no
obligation to make or cause to be made any other capital contributions to any
Lessee.
(d) Limitation on Distributions. No dividends or other
distributions (other than distributions in the form of additional equity
interests in a Lessee) shall, for any period, be declared, paid or set apart for
payment on any equity interest in any Lessee (the "Lessee's Capital"), and no
Lessee Capital shall be redeemed, purchased or otherwise acquired by Lessee for
any consideration (except by conversion into or exchange for other equity
interests in Lessee), unless, after giving effect to such proposed distribution,
(i) the Liquid Net Worth of each Lessee (and the Lessees collectively) equals or
exceeds the Minimum Liquid Net Worth then applicable to such Lessee(s), and (ii)
no uncured monetary default of any Lessee exists under this Agreement nor any
uncured default in the payment of Rent (including, without limitation, estimated
or actual monthly payments of Percentage Rent) under any Percentage Lease
(unless such dividend or other distribution will be used to cure such default).
(e) Payments to Affiliates. Except for Post-Default Operating
Expenses and distributions to holders of equity interests permitted under
Section 5(d) above, no Lessee shall make, directly or indirectly, any payments
(for services or otherwise) to Affiliates of Lessee unless, after giving effect
to such proposed payment, (i) the Liquid Net Worth of each Lessee (and the
Lessees collectively) shall equal or exceed the Minimum Liquid Net Worth then
applicable to such Lessee(s), and (ii) no uncured monetary default of any Lessee
exists under this Agreement nor any uncured default in the payment of Rent
(including, without limitation, estimated or actual monthly payments of
Percentage Rent) under any Percentage Lease.
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6. Changes of Control and Activities of Lessees.
(a) Voluntary Transfers or Changes in Structure. BHR
represents that, except with respect to the Percentage Lease for, and Lessee of,
the Chateau LeMoyne Hotel (to the extent included in the Existing Hotels), on
the Closing Date, each Lessee will be a wholly-owned subsidiary of BHR and BHR
will have sole economic and voting interest in each Lessee. During the Term of
the Percentage Leases, BHR and Lessees may, but shall not be obligated to, seek
the prior written consent of FelCor (following not less than sixty (60) days
prior written notice to FelCor), which consent shall not be unreasonably
withheld, to a Transfer. If requested, FelCor shall not have the right to
withhold its consent to any Transfer if (i) the Transferee (or its parent) has
Liquid Net Worth at least equal to that of, and otherwise is as creditworthy as,
BHR as of the end of the Fiscal Year preceding such Transfer, and (ii) the
Transferee (A) has a good reputation in the U.S. hospitality industry and (B)
either (x) has substantial expertise in the management of hotels comparable to
the Hotels or (y) will retain a substantial number of hotel management
employees, including executive management, of Transferor. In the event of a
Transfer to which FelCor does not consent, (i) the percentage hurdle for
purposes of a Revenue Performance Shortfall under the Percentage Leases affected
by such Transfer shall increase from eighty percent (80%) to ninety percent
(90%), (ii) the Overall Shortfall Cure Percentage shall be increased from ninety
percent (90%) to one hundred percent (100%), (iii) the Revenue Performance
Shortfall test period shall be reduced from three (3) years to one (1) year, and
(iv) the respective Lessee shall have no opportunity to cure any Revenue
Performance Shortfall thereafter (including but not limited to the first full
Fiscal Year following the effective date of any such Transfer).
(b) Hostile Change of Control. In the event of a Hostile
Change of Control, Lessors shall have the absolute right and option (in its
sole, unreviewable discretion) to terminate any or all of the Percentage Leases
upon not less than thirty (30) days prior written notice to the respective
Lessee, without payment of any Termination Fee.
(c) Other Business Activities. After the occurrence and during
the continuance of a Default by Lessee, without the prior written consent of
FelCor, no Lessee shall engage in or incur any expenses or liabilities related
to any business or activity in which it is not engaged at the time of such
Default.
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7. Financial Statements; Indemnification; Due Diligence;
Confidentiality.
(a) Financial Disclosure.
(i) During the term of any Percentage Lease, BHR and Lessees agree:
(A) to deliver, and otherwise make available, to
FelCor, FSLP and Lessors,
(1) not more than forty-five (45) days
following the end of each calendar quarter of each year during the
Terms of the Percentage Leases, quarterly unaudited financial
statements, including balance sheet, statement of operations, statement
of shareholders' equity, statement of cash flows for Lessee for the
most recently ended calendar quarter and the comparable prior year
period prepared in conformity with GAAP;
(2) not more than ninety (90) days after the
end of each calendar year during the Terms of the Percentage Leases,
(A) a hotel-by-hotel breakdown of revenue by source, occupied and
available rooms, and maintenance and repair expenses, and (B) audited
annual financial statements and schedules for the most recently ended
calendar year prepared in accordance with GAAP, audited by a nationally
recognized certified public accounting firm reasonably acceptable to
FelCor, FSLP and Lessors;
(3) any historical financial information
reasonably necessary to re-state historical financial information to
conform to the presentation of FelCor's, FSLP's or Lessor's audited and
unaudited financial statements at any future time; and
(4) on a timely basis, any other information
reasonably requested by FelCor, FSLP and Lessors to permit FelCor, FSLP
and Lessors to meet their filing and reporting requirements under the
1934 Act and to file and have declared effective registration
statements under the 1933 Act, including providing information
necessary to complete the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" section of FelCor's 1934
Act reports and 1933 Act registration statements as it may relate to
BHR, Lessees or the Hotels; and
(B) that BHR or Lessees shall bear the cost of
obtaining, preparing and providing all information required to be furnished to
FelCor, FSLP and Lessors under this Section 7(a)(i), including the cost and
related expenses of the annual audit of Lessees' financial statements.
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(ii) During the term of any Percentage Lease, FelCor and Lessor agree
to make available to BHR and Lessees on a timely basis, any information
reasonably requested by BHR and Lessees to permit BHR to meet its filing and
reporting requirements under the 1934 Act and to file and have declared
effective registration statements under the 1933 Act, including providing
information necessary to complete the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" section of BHR's 1934 Act reports
and 1933 Act registration statements as it may relate to Lessors or the Hotels.
(b) Indemnification.
(i) FelCor, FSLP and each Lessor agree, jointly and severally, to
indemnify, defend (with counsel reasonably acceptable to BHR and Lessees), and
hold harmless BHR, each Lessee and each Affiliated Manager, and their
stockholders, partners, limited liability company members, officers, directors
and controlling persons (collectively, "Lessee Indemnified Parties") from and
against any losses, claims, damages, expenses or liabilities (or actions in
respect thereof) to which the Lessee Indemnified Parties may become subject
under the 1933 Act, the 1934 Act or otherwise, insofar as such losses, claims,
damages, expenses or liabilities or actions in respect thereof arise out of or
are based upon the 1934 Act reports or 1933 Act registration statements of
FelCor, FSLP or Lessors, except to the extent any such claims, liabilities,
losses, damages, expenses, or liabilities (or actions in respect thereof) result
from any untrue statement of a material fact or omission of any material fact in
the information provided by (or on behalf of) a Lessee Indemnified Party to
FelCor, FSLP or Lessor pursuant to Section 7(a)(i) above.
(ii) BHR and each Lessee agree, jointly and severally, to indemnify,
defend (with counsel reasonably acceptable to FelCor, FSLP and Lessors) and hold
harmless FelCor, FSLP and Lessors, and their respective stockholders, partners,
limited liability company members, officers, directors and controlling persons
(collectively, "Lessor Indemnified Parties") from and against any losses,
claims, damages, expenses or liabilities (or actions in respect thereof) to
which the Lessor Indemnified Parties may become subject under the 1933 Act, the
1934 Act or otherwise, insofar as such losses, claims, damages, expenses or
liabilities or actions in respect thereof arise out of or are based upon the
1934 Act reports or 1933 Act registration statements of BHR or Lessees, except
to the extent any such claims, liabilities, losses, damages, expenses, or
liabilities (or actions in respect thereof) result from
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any untrue statement of a material fact or omission of any material fact in the
information provided by (or on behalf of) a Lessor Indemnified Party to BHR or
Lessees pursuant to Section 7(a)(ii) above.
(c) Due Diligence. During the term of each Percentage Lease,
BHR and Lessees agree:
(i) to permit FelCor, FSLP and Lessees, together with
their independent public accountants, counsel, financial advisors, underwriters,
underwriters' counsel, rating agencies, lenders and others having a legitimate
interest in Lessees' or the Hotels' financial condition and results of
operations, during regular business hours, upon reasonable notice and at the
sole cost of FelCor, FSLP or Lessors (provided there shall be no charge by
Lessees or BHR to FelCor, FSLP or Lessors for the reasonable time of Lessees'
and BHR's officers or employees), to interview officers and employees of Lessees
or BHR and to have access to and review:
(A) the general accounting records of
Lessees or any Hotel for purposes of performing an audit of FelCor,
FSLP, Lessors or any Hotel in accordance with generally accepted
auditing standards and to conduct reasonable due diligence with respect
to Lessees and their business activities and the Hotels; and
(B) Lessees' entity records, minute books,
contracts and other information, documents, agreements or items
relating to the operation of the Hotels and Lessees' financial
condition.
(ii) to cooperate promptly and fully with FelCor,
FSLP and Lessors upon request and at the cost of FelCor, FSLP or Lessors (except
with respect to the cost of obtaining, preparing and providing the information
required to be furnished to FelCor, FSLP and Lessors under Section 7(a)(i) above
and any costs relating to the reasonable time of employees or officers of
Lessees or BHR), in making available such information with respect to Lessees or
the Hotels as may be then required by any regulatory agency, including the SEC
or any stock exchange on which FelCor's, FSLP's or Lessors' securities may be
registered, listed or traded.
(iii) to use their reasonable best efforts to cause
the independent public accountants preparing audits of BHR and Lessees to
provide FelCor, FSLP and Lessors, at the sole cost of FelCor, FSLP or Lessors
with all consents and comfort letters of such accountants required
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for FelCor's or Lessors' filings under the 1933 Act or the 1934 Act or to have
FelCor's or Lessors' registration statements be declared effective under the
1933 Act.
During the term of each Percentage Lease, FelCor, FSLP and
Lessors agree:
(i) to permit BHR and Lessees, together with their
independent public accountants, counsel, financial advisors, underwriters,
underwriters' counsel, rating agencies, lenders and others having a legitimate
interest in Lessors' or the Hotels' financial condition and results of
operations, during regular business hours, upon reasonable notice and at the
sole cost of BHR and Lessees (provided there shall be no charge by FelCor, FSLP
or Lessors to Lessees or BHR for the reasonable time of FelCor's, FSLP's or
Lessors' officers or employees), to interview officers and employees of FelCor,
FSLP and Lessors) and to have access to and review:
(A) the general accounting records of
Lessors or any Hotel for purposes of performing an audit of BHR,
Lessees or any Hotel in accordance with generally accepted auditing
standards and to conduct reasonable due diligence with respect to
Lessors and their business activities and the Hotels; and
(B) Lessors' entity records, minute books,
contracts and other information, documents, agreements or items
relating to the operation of the Hotels and Lessors' financial
condition.
(ii) to cooperate promptly and fully with Lessees and
BHR, upon request and at the cost of Lessees, in making available such
information with respect to FelCor, FSLP or Lessors as may be then required by
any regulatory agency, including the SEC or any stock exchange on which BHR's or
Lessees' securities may be registered, listed or traded.
(iii) to use their reasonable best efforts to cause
the independent public accountants preparing audits of FelCor, FSLP or Lessors
to provide BHR and Lessees, at the sole cost of Lessees and BHR, with all
consents and comfort letters of such accountants required for BHR's or Lessees'
filings under the 1933 Act or the 1934 Act or to have BHR's or Lessees'
registration statements be declared effective under the 1933 Act.
(d) Confidentiality. To the extent Lessors or FelCor on the
one hand, or Lessees or BHR on the other, obtains information or becomes aware
of material information concerning the other that is not disclosed in a public
announcement or filing under the 1933 Act or
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the 1934 Act by BHR or FelCor, each party agrees that it shall not improperly
disclose or unlawfully utilize such information or otherwise act unlawfully with
respect thereto.
8. REIT Requirements.
(a) BHR has been advised by FelCor and understands that, in
order for FelCor to qualify as a real estate investment trust under the Code
("REIT"), the following requirements (the "REIT Requirements") must be
satisfied:
(i) The average of the adjusted tax bases of a
Lessor's personal property that is leased to a Lessee under a Percentage Lease
at the beginning and end of a calendar year cannot exceed fifteen percent (15%)
of the average of the aggregate adjusted tax bases of such Lessor's real and
personal property that is leased to such Lessee under such Percentage Lease at
the beginning and end of such calendar year.
(ii) No Lessee can sublet the Hotels and related
property that are leased to it by a Lessor, or enter into any similar
arrangement, on any basis such that the rental or other amounts paid by the
sublessee thereunder would be based, on whole or in part, on either (i) the net
income or profits derived by the business activities of the sublessee or (ii)
any other formula such that any portion of the Percentage Rent or other rent
paid by the Lessee to the Lessor would fail to qualify as "rents from real
property" within the meaning of Section 856(d) of the Code.
(iii) No Lessee can sublease the Hotels and related
property leased to it by a Lessor to, or enter into any similar arrangement
with, any person in which FelCor owns, directly or indirectly, a ten percent
(10%) or greater ownership interest, within the meaning of Section 856(d)(2)(B)
of the Code.
(iv) FelCor cannot own, directly or indirectly, a ten
percent (10%) or greater ownership interest in BHR or any Lessee, within the
meaning of Section 856(d)(2)(B) of the Code.
(v) Unless specifically permitted by the Board of
Directors of FelCor, no person can own, directly or indirectly, capital stock of
FelCor that exceeds the limit set forth in FelCor's Charter.
(b) BHR and Lessees agree, and agree to use reasonable efforts
to cause their Affiliates, to use their reasonable best efforts to permit the
REIT Requirements to be satisfied. BHR
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and Lessees agree, and agree to use their reasonable best efforts to cause their
Affiliates, to cooperate in good faith with FelCor, FSLP and Lessors to ensure
that the REIT Requirements are satisfied, including but not limited to,
providing FelCor with information about the ownership of BHR, Lessees, and their
Affiliates to the extent that such information is reasonably available, and
complying with the related obligations of Lessees under each Percentage Lease.
BHR and Lessees agree, and agree to use their reasonable best efforts to cause
their Affiliates, upon request by FelCor (and, where appropriate action not
already required by the terms hereof or of the Percentage Leases is required by
this Section 8(b), at FelCor's expense), to take reasonable action necessary to
ensure compliance with the REIT Requirements. Immediately after becoming aware
that any REIT Requirement is not, or will not be, satisfied, BHR or Lessees
shall notify, or use reasonable efforts to cause their Affiliates to notify,
FelCor of such noncompliance.
9. Cross Default. From and after the Closing Date, a Financial Default
(as hereinafter defined) by any Lessee under the Percentage Lease with respect
to any Hotel will constitute and continue to create an Event of Default (until
cured, if curable) under the Percentage Leases with respect to all other Hotels,
except to the extent prohibited by Lessors' mortgage financing secured by a lien
upon any such other Hotel. A "Financial Default" shall mean and refer to any
Event of Default under a Percentage Lease consisting of one or more of the
following:
(i) if Lessee fails to pay Base Rent or Percentage Rent to
Lessor as and when due (following any applicable grace or cure period);
(ii) if Lessee (A) shall file a petition in bankruptcy or
reorganization for an arrangement pursuant to any federal or state
bankruptcy law or any similar federal or state law, or shall be
adjudicated a bankrupt or shall make an assignment for the benefit of
creditors or shall admit in writing its inability to pay its debts
generally as they become due, or if a petition or answer proposing the
adjudication of Lessee as a bankrupt or its reorganization pursuant to
any federal or state bankruptcy law or any similar federal or state law
shall be filed in any court and Lessee shall be adjudicated a bankrupt
and such adjudication shall not be vacated or set aside or stayed
within sixty (60) days after the entry of an order in respect thereof,
or if a receiver of Lessee or of the whole or substantially all of the
assets of Lessee shall be appointed in any proceeding brought by Lessee
or if any such receiver, trustee or liquidator shall be appointed in
any proceeding brought against Lessee and shall not be vacated or set
aside or stayed within sixty (60) days after such appointment, or (B)
is liquidated or dissolved, or begins proceedings toward such
liquidation or dissolution, or, in any manner, permits the sale or
divestiture of substantially all of its assets, except as permitted
hereunder; or
23
<PAGE> 24
(iii) if a material Event of Default (including, without
limitation, any of those listed above) occurs under any Percentage
Lease at any time during any period of twelve (12) consecutive months
in which any material Events of Default have occurred under at least
four (4) other Percentage Leases.
10. Default by Lessee.
(a) A "Default by Lessee" shall exist under this Agreement if
any one or more of the following occur:
(i) Liquid Net Worth Covenants. During the term of
any Percentage Lease, a Lessee (or the Lessees collectively) fails to maintain
its (or their aggregate) Minimum Liquid Net Worth as required in, or makes
distributions or payments prohibited by, Sections 5 hereof (each, a "LNW
Deficiency"), and fails to cure such LNW Deficiency within thirty (30) days
following notice thereof from FelCor to BHR; provided, however that if BHR is
required to raise debt or equity capital in order to supply cash, marketable
securities or other assets that qualify for the Liquid Assets Amount or Credit
Enhancement to cure such LNW Deficiency, and in good faith commences and
continues to raise such debt or equity capital within thirty (30) days after
such determination of Liquid Net Worth, BHR shall have a reasonable period not
to exceed ninety (90) days to raise such debt or equity capital and to cause
such required cash, marketable securities or other assets that qualify for the
Liquid Assets Amount or Credit Enhancement to be included in such Lessee's
Liquid Net Worth in order to eliminate any LNW Deficiency.
(ii) Default Under Percentage Leases. A Financial
Default occurs under any of the Percentage Leases to which such Lessee is a
party.
(iii) Other Breaches. BHR or any Lessee fails to
comply with any other provision of this Agreement for a period of thirty (30)
days after being notified by FelCor in writing of the provisions of this
Agreement with which such Lessee has failed to comply; provided that if such
default (other than if Lessee fails to pay any Base Rent or Percentage Rent
under any Percentage Lease, when due after any applicable cure period, which
failure shall be subject to the provisions set forth in the Percentage Leases,
or if Lessee fails to maintain its Minimum Liquid Net Worth as required in, or
makes distributions or payments prohibited by, Section 5 hereof) cannot with due
diligence be cured within a thirty (30) day period, such period shall be
extended for such reasonable
24
<PAGE> 25
time as BHR or such Lessee promptly and with due diligence commences and
continues the cure thereof but in no event for a period of more than ninety (90)
days following the date of notice from FelCor to BHR.
(b) In the event of a Default by Lessee, and without prejudice
to the rights and remedies of any Lessor under any Percentage Lease, Lessors
may, subject to its compliance with the terms of any Recognition Agreement,
elect to terminate all of the Percentage Leases (or all of the Percentage Leases
to which the Lessee in default is a party), except to the extent expressly
prohibited by mortgage financing of Lessors that is secured by a lien upon the
Hotel covered by such Percentage Lease. In no event shall Lessors have the
option to terminate less than all Percentage Leases (or all Percentage Leases to
which the Lessee in default is a party) as to which they have both the
contractual and legal right so to terminate.
11. Recognition Agreement. FelCor and Lessors agree to negotiate in
good faith and enter into Recognition Agreements with Bankers Trust Company
prior to the Closing Date and, if an agreement can be reached on mutually
acceptable terms, with any other lender to BHR and/or any Lessees subsequent to
the Closing Date, addressing such matters as are reasonably required by any such
lender and reasonably acceptable to FelCor and Lessors. Without limiting the
generality of the foregoing, FelCor would agree to lender protection provisions,
in any Recognition Agreement to which BHR's lenders and a Lessee that is a
Subsidiary of BHR are parties, substantially in the form attached hereto as
Exhibit D.
12. Miscellaneous.
(a) Entire Agreement; Modification, Amendments and Waivers.
This Agreement, together with the Percentage Leases and instruments and
agreements referenced herein and therein, constitutes the entire agreement among
the parties hereto with respect to the subject matter of this Agreement and
supersedes the MHA and any prior oral agreements among the parties hereto. No
modification, amendment or waiver of any provision of this Agreement shall be
effective unless the same is in a writing signed by FelCor and BHR.
(b) Notices. All notices, demands, requests, consents
approvals and other communications ("Notice") hereunder shall be in writing and
personally served, mailed (by registered
25
<PAGE> 26
or certified mail, return receipt requested and postage prepaid), sent by Fed Ex
or other nationally recognized overnight courier, or sent by facsimile to the
parties as set forth below:
If to BHR or any Lessee:
Bristol Hotels & Resorts, Inc.
14295 Midway Road
Dallas, Texas 75244
Facsimile: 972/391-3497
Attention: President (with a copy to
Attention: General Counsel)
If to FelCor, FSLP or any Lessor:
FelCor Suite Hotels, Inc.
545 E. John Carpenter Frwy, Suite 1300
Irving, Texas 75062
Facsimile: 972/444-4949
Attention: President (with a copy to
Attention: General Counsel)
or to such other address or addresses as either party may hereafter designate.
Personally delivered Notice (including any confirmed facsimile transmission or
delivery by nationally recognized overnight courier) shall be effective upon
receipt at the specified address. Notice given by mail shall be complete at the
time of deposit in the U.S. Mail system, but any prescribed period of Notice and
any right or duty to do any act or make any response within any prescribed
period or on a date certain after the service of such Notice given by mail shall
be extended five (5) days.
(c) Successors and Assigns. The provisions of this Agreement
shall be binding upon the parties hereto and all of their permitted successors
and assigns and inure to the benefit of the parties hereto and their permitted
successors and assigns.
(d) Termination. This Agreement (other than the parties'
indemnification rights and obligations hereunder) shall terminate (without
prejudice to any accrued claims hereunder) at such time as all of the Percentage
Leases have terminated.
(e) Governing Law. This Agreement shall be governed by the
laws of the State of Texas.
26
<PAGE> 27
(f) Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall be an original once all parties have signed a
counterpart hereof, with the same force and effect as if the signatures thereto
and hereto were upon the same instrument.
(g) WAIVERS. EACH PARTY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT TO A TRIAL BY JURY IN ANY PROCEEDINGS BROUGHT BY
EITHER PARTY TO ENFORCE THE PROVISIONS OF THIS AGREEMENT. IN ANY SUIT OR OTHER
CLAIM BROUGHT BY EITHER PARTY SEEKING DAMAGES AGAINST THE OTHER PARTY FOR BREACH
OF ITS OBLIGATIONS UNDER THIS AGREEMENT, THE PARTY AGAINST WHOM SUCH CLAIM IS
MADE SHALL BE LIABLE TO THE OTHER PARTY ONLY FOR ACTUAL DAMAGES AND NOT FOR
CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES.
(h) Time of the Essence. Time is of the essence of this
Agreement.
(i) Conflict. In the event of any actual conflict or
inconsistency between the terms of this Agreement and the terms of any
Percentage Lease, the terms of this Agreement shall take precedence.
(j) Further Assurances. From time to time, as when requested
by a party hereto, the other parties will execute and deliver, or cause to be
executed and delivered, all such other documents and instruments as may be
reasonably required to further or better evidence the agreements herein.
(k) Interpretation; Arbitration. No provision of this
Agreement will be interpreted in favor of, or against, any of the parties hereto
by reason of the extent to which any such party or its counsel participated in
the drafting hereof or by reason of the extent to which any such provision is
inconsistent with any prior draft hereof. Any disputes arising under this
Agreement will be resolved in accordance with the arbitration procedures set
forth in Section 22.1 of the Percentage Leases.
(l) Future Affiliates. Any currently existing or future
Affiliate of FelCor or the Lessors that is or in the future may be a Lessor
under a Percentage Lease shall become a party to this Agreement, entitled to the
same rights, benefits and remedies to which FelCor and the Lessors are entitled
hereunder by execution of an addendum to this Agreement. Any currently existing
or
27
<PAGE> 28
future Affiliate of BHR or the Lessees that is or in the future may be a Lessee
under a Percentage Lease shall become a party to this Agreement, entitled to the
same rights, benefits and remedies to which BHR and the other Lessees are
entitled hereunder by execution of an addendum to this Agreement. Upon the
request of any party, such future Lessors and Lessees shall execute any
documents, instruments or amendments hereto reasonably requested by a party
hereto to further evidence any such Affiliate's rights, benefits and remedies
hereunder.
(m) Representatives. This Agreement provides the Lessors
certain rights, benefits and remedies. FelCor is hereby designated and appointed
the representative of the Lessors, and the Lessees and BHR shall be permitted to
rely upon any written or oral communication or notification from FelCor as being
from the respective Lessor. Any notice required to be given hereunder shall be
given to FelCor as representative for any and all of the Lessors.
This Agreement provides the Lessees certain rights,
benefits and remedies. BHR is hereby designated and appointed the representative
of the Lessees, and the Lessors and FelCor shall be permitted to rely upon any
written or oral communication or notification from BHR as being from the
respective Lessee. Any notice required to be given hereunder shall be given to
BHR as representative for any or all of the Lessees.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
BRISTOL HOTELS & RESORTS, INC.
By: /s/ JEFFREY P. MAYER
-------------------------------------
Jeffrey P. Mayer, Vice President
FELCOR SUITE HOTELS, INC.
By: /s/ LAWRENCE D. ROBINSON
-------------------------------------
Lawrence D. Robinson, Senior Vice
President
28
<PAGE> 29
FELCOR SUITES LIMITED PARTNERSHIP
By: FelCor Suite Hotels, Inc., its
general partner
By: /s/ LAWRENCE D. ROBINSON
---------------------------------
Lawrence D. Robinson
Senior Vice President
LESSORS:
By: /s/ JEFFREY P. MAYER
-------------------------------------
Jeffrey P. Mayer, Vice President of
each of the Lessors, or the
Subsidiaries of Bristol Hotel
Company acting on behalf of the
Lessors, listed on Schedule 3
attached hereto
LESSEES:
By: /s/ JEFFREY P. MAYER
-------------------------------------
Jeffrey P. Mayer, Vice President of
each of the Lessees, or the
Subsidiaries of BHR acting on behalf
of the Lessees, listed on Schedule 2
attached hereto
29
<PAGE> 30
Exhibit A - Existing Hotels
Exhibit B - Sale Hotels
Exhibit C - Form of Guaranty
Exhibit D - Leasehold Lender Protection Provisions
Schedule 1 - Contemplated Renovations
Schedule 2 - Lessors
Schedule 3 - Lessees
30
<PAGE> 31
EXHIBIT A
EXISTING HOTELS
<TABLE>
<CAPTION>
LEGEND:
<S> <C>
"BLTC" Bristol Lodging Tenant Company, a Delaware corporation
"FHAC" FelCor Hotel Asset Company, L.L.C., a Delaware limited liability company
"FLC" FelCor Lodging Company, L.L.C., a Delaware limited liability company
"FOHC" FelCor Omaha Hotel Company, L.L.C., a Delaware limited liability company
</TABLE>
<TABLE>
<CAPTION>
LEASED PROPERTY NO. STATE LESSOR (OWNER): LESSEE:
- ----------------------------------------- ------- ----------------- --------------------------------- -------------
<S> <C> <C> <C> <C>
1. Holiday Inn - Montgomery East I-85 806 AL FHAC BHTC
(O)
2. Holiday Inn - Texarkana I-30 (GL) 822 AR FHAC BHTC
3. Days Inn - Flagstaff (O) 721 AZ FHAC BHTC
4. Fairfield Inn - Downtown Scottsdale 522 AZ FHAC BHTC
(GL)
5. Crowne Plaza - Pleasanton (O) 842 CA FHAC BHTC
6. Holiday Inn - San Diego On the Bay 836 CA FHAC BHTC
(GL)
7. Holiday Inn - San Francisco Financial 840 CA FHAC BHTC
District (GL)
8. Holiday Inn - San Francisco 841 CA FHAC BHTC
Fisherman's Wharf (GL)
9. Holiday Inn - San Jose North 843 CA FHAC BHTC
(Milpitas) (O)
10. Holiday Inn - Santa Barbara (O) 531 CA FLC BLTC
11. Holiday Inn Select - Irvine Orange 837 CA FHAC BHTC
County Airport (O)
12. Holiday Inn Select - San Francisco 838 CA FHAC BHTC
Union Square (O)
13. Holiday Inn - Cambridge (O) 858 CN FelCor Canada Co. BHTC Canada, Inc.
14. Holiday Inn - Kitchener Waterloo (O) 857 CN FelCor Canada Co. BHTC Canada, Inc.
15. Holiday Inn - Peterborough - 859 CN FelCor Canada Co. BHTC Canada, Inc.
Waterfront (O)
16. Holiday Inn - Sarnia (O) 860 CN FelCor Canada Co. BHTC Canada, Inc.
17. Holiday Inn - Toronto Yorkdale (O) 856 CN FelCor Canada Co. BHTC Canada, Inc.
18. Holiday Inn - Toronto Airport (O) 855 CN FelCor Canada Co. BHTC Canada, Inc.
19. Holiday Inn Express - Colorado 711 CO FHAC BHTC
Springs Central (O)
</TABLE>
<PAGE> 32
<TABLE>
<CAPTION>
LEASED PROPERTY NO. STATE LESSOR (OWNER): LESSEE:
- ----------------------------------------- ------- ----------------- --------------------------------- -------------
<S> <C> <C> <C> <C>
20. Ramada Inn - Colorado Springs 712 CO FHAC BHTC
North (O)
21. Holiday Inn - Hartford Downtown (O) 850 CT FHAC BHTC
22. Holiday Inn Select - Stamford (GL) 849 CT FHAC BHTC
23. Holiday Inn - Cocoa Beach 812 FL FHAC BHTC
Oceanfront Resort (O)
24. Holiday Inn - Near Bush Gardens 813 FL FHAC BHTC
Tampa (GL)
25. Holiday Inn - Nikki Bird Resort 809 FL FHAC BHTC
(Disney Main Gate) (GL)
26. Holiday Inn - Orlando International 810 FL FHAC BHTC
Drive Resort (O)
27. Holiday Inn Select - Miami 814 FL FHAC BHTC
International Airport (O)
28. Holiday Inn Select - Orlando 808 FL FHAC BHTC
International Airport (O)
29. Courtyard by Marriott - Downtown 234 GA FHAC BHTC
Atlanta (O)
30. Crowne Plaza - Airport Atlanta (O, 562 GA FHAC BHTC
but GL on portion of parking lot)
31. Fairfield Inn - Downtown Atlanta (O) 235 GA FHAC BHTC
32. Hampton Inn - Marietta (O) 690 GA FHAC BHTC
33. Harvey Hotel - Atlanta Powers Ferry 374 GA FLC BLTC
(O)
(converting to Crowne Plaza)
34. Holiday Inn - Atlanta Airport North (O, 287 GA FLC BLTC
but GL on portion of parking lot)
35. Holiday Inn - Atlanta South (prior to 365 GA FLC BLTC
9/4/97 Jonesboro) (O)
36. Holiday Inn - Columbus Airport North 805 GA FHAC BHTC
(GL)
37. Holiday Inn Express - Atlanta I-20 759 GA FHAC BHTC
East (O)
38. Holiday Inn Express - Atlanta 257 GA FHAC BHTC
Northeast (O)
39. Holiday Inn Select - Atlanta Perimeter 680 GA FLC BLTC
Dunwoody (O)
40. Hampton Inn - Davenport (O) 875 IA FOHC BHTC
41. Holiday Inn - Davenport (O) 874 IA FOHC BHTC
</TABLE>
2
<PAGE> 33
<TABLE>
<CAPTION>
LEASED PROPERTY NO. STATE LESSOR (OWNER): LESSEE:
- ----------------------------------------- ------- ----------------- --------------------------------- -------------
<S> <C> <C> <C> <C>
42. Allerton Hotel - Chicago (O) 800 IL FHAC BHTC
43. Hampton Inn - Moline (Lots 2 and 4) 871 IL FelCor Moline Hotel, L.L.C. BHTC
(O)
44. Hampton Inn - Moline Airport (O) 873 IL FelCor Moline Hotel, L.L.C. BHTC
45. Holiday Inn and Holiday Inn Express - 872 IL FelCor Moline Hotel, L.L.C. BHTC
Moline Airport (O)
46. Hampton Inn - Hays (O) 877 KS FOHC BHTC
47. Holiday Inn - Great Bend (O) 880 KS FOHC BHTC
48. Holiday Inn - Hays (O) 876 KS FOHC BHTC
49. Holiday Inn - Salina (GL) 878 KS FOHC BHTC
50. Holiday Inn Express - Colby (O) 881 KS FOHC BHTC
51. Holiday Inn Express Hotel & Suites - 879 KS FOHC BHTC
Salina I-70 (GL)
52. Holiday Inn - New Orleans French 830 LA FLC BLTC
Quarter (GL)
53. Holiday Inn Select - Boston 846 MA FHAC BHTC
Government Center (GL)
54. Holiday Inn - Kansas City Northeast 845 MO FHAC BHTC
(O)
55. Holiday Inn - Westport (O) 863 MO FelCor St. Louis Company, BHTC
L.L.C.
56. Crowne Plaza - Downtown Jackson 369 MS FLC BLTC
(O) (prior to 10-1-97 Harvey Hotel)
57. Hampton Inn - Jackson North (O) 686 MS FHAC BHTC
58. Harvey Hotel & Suites - Jackson 709 MS FLC BHTC
North (O)
(Converting to Holiday Inn)
59. Holiday Inn - Executive Conference 826 MS FHAC BHTC
Center Olive Branch (O)
(Converting to Whispering Woods)
60. Holiday Inn - Jackson Southwest (O) 227 MS FLC BLTC
61. Hampton Inn - Omaha Southwest (O) 869 NE FOHC BHTC
62. Hampton Inn - Omaha Central (O) 866 NE FOHC BHTC
63. Holiday Inn - Omaha Northwest (Old 868 NE FOHC BHTC
Mill) (O)
64. Holiday Inn Express & Suites - 870 NE FOHC BHTC
Omaha Southwest (O)
</TABLE>
3
<PAGE> 34
<TABLE>
<CAPTION>
LEASED PROPERTY NO. STATE LESSOR (OWNER): LESSEE:
- ----------------------------------------- ------- ----------------- --------------------------------- -------------
<S> <C> <C> <C> <C>
65. Holiday Inn - Omaha Central I-80 (O) 865 NE FOHC BHTC
66. Homewood Suites Hotel - Omaha (O) 867 NE FOHC BHTC
67. Holiday Inn - Albuquerque 844 NM FHAC BHTC
Mountainview (O)
68. Holiday Inn - Independence Mall (O) 864 PA FelCor Pennsylvania Company, BHTC
L.L.C.
69. Holiday Inn Select - Philadelphia 847 PA Center City Hotel Associates BHTC
Center City (O)
(Converting to Crowne Plaza)
70. Holiday Inn - Columbia Airport (O) 804 SC FHAC BHTC
71. Holiday Inn - Spartanburg West (O) 803 SC FHAC BHTC
72. Holiday Inn Select - Greenville 802 SC FHAC BHTC
(Roper) (O)
73. The Mills House Hotel - Charleston 801 SC FHAC BHTC
Holiday Inn (O)
74. Holiday Inn - Chattanooga Southeast 807 TN FHAC BHTC
I-75 (O)
75. Holiday Inn - Knoxville West (GL) 824 TN FHAC BHTC
76. Holiday Inn Select - Nashville 827 TN FHAC BHTC
Opryland/Airport
(Nashville-Briley Parkway) (GL)
77. Crowne Plaza Suites - Dallas (GL) 550 TX FelCor Hotel Company, Ltd. BHTC
(Bristol Suites prior to 7//98)
78. Courtyard by Marriott - Houston Near 299 TX FHAC BHTC
The Galleria (O)
79. Fairfield Inn - Dallas Regal Row (O) 505 TX FHAC BHTC
80. Fairfield Inn - Houston I-10 East (O) 729 TX FHAC BHTC
81. Fairfield Inn - Houston Near The 396 TX FHAC BHTC
Galleria (O)
82. Hampton - Downtown Dallas/West 564 TX FHAC BHTC
End (O)
83. Hampton Inn - Houston I-10 East (O) 792 TX FHAC BHTC
84. Crowne Plaza - Addison (O) 546 TX FelCor Hotel Company, Ltd. BHTC
(prior to 7/98 Harvey Hotel)
85. Harvey Hotel - Dallas (GL) 542 TX FelCor Hotels Investments II, BHTC
Ltd.
86. Crowne Plaza Hotel - Dallas 607 TX FLC BLTC
Brookhollow (Harvey Hotel prior to
7/98)(O)
</TABLE>
4
<PAGE> 35
<TABLE>
<CAPTION>
LEASED PROPERTY NO. STATE LESSOR (OWNER): LESSEE:
- ----------------------------------------- ------- ----------------- --------------------------------- -------------
<S> <C> <C> <C> <C>
87. Harvey Hotel - DFW Airport (GL) 560 TX FelCor Hotel Company, Ltd. BHTC
88. Harvey Hotel - Plano (O) 544 TX FelCor Hotels Investments I, Ltd. BHTC
89. Harvey Suites - DFW Airport (O) 548 TX FLC BLTC
90. Harvey Suites - Houston Medical 556 TX FLC BLTC
Center (GL)
(Converting to Holiday Inn Hotel and
Suites)
91. Holiday Inn - Amarillo I-40 (GL) 820 TX FHAC BHTC
92. Holiday Inn - Austin Town Lake (GL 815 TX FHAC BHTC
on parking garage)
93. Holiday Inn - Beaumont Midtown I-10 821 TX FHAC BHTC
(O)
94. Holiday Inn - Houston Intercontinental 747 TX FLC BLTC
Airport (O)
95. Holiday Inn - Medical Center Houston 667 TX FLC BLTC
Medical Center (O)
96. Holiday Inn - Midland County Villa (O) 882 TX FelCor Country Villa Hotel, BHTC
L.L.C.
97. Holiday Inn - Plano (O) 545 TX FHAC BHTC
98. Holiday Inn - San Antonio Downtown 818 TX FHAC BHTC
(GL)
99. Holiday Inn - Waco I-35 (O) 823 TX FHAC BHTC
100. Holiday Inn Express Hotel & Suites - 884 TX FelCor Country Villa Hotel, BHTC
Odessa Parkway Blvd. (O) L.L.C.
101. Holiday Inn Hotel & Suites - Odessa 883 TX FelCor Country Villa Hotel, BHTC
Centre (O) L.L.C.
102. Holiday Inn Select - Houston I-10 816 TX FHAC BHTC
West (O)
103. Holiday Inn Select - Houston Near 554 TX FLC BLTC
Greenway Plaza (O)
104. Holiday Inn Select - San Antonio 817 TX FHAC BHTC
International Airport (O)
105. Holiday Inn - Salt Lake City Airport 862 UT FelCor Salt Lake, Inc. Bristol Salt Lake Tenant
(GL) Company
</TABLE>
5
<PAGE> 36
EXHIBIT B
SALE HOTELS
[INTENTIONALLY OMITTED]
<PAGE> 37
EXHIBIT C
FORM OF GUARANTY
GUARANTY
[INTENTIONALLY OMITTED]
Bristol Hotels & Resorts, Inc.
By:
-------------------------------------
Jeffrey P. Mayer, Vice President
<PAGE> 38
EXHIBIT D
LEASEHOLD LENDER PROTECTION PROVISIONS
[INTENTIONALLY OMITTED]
1
<PAGE> 39
SCHEDULE 1
CONTEMPLATED RENOVATIONS
[INTENTIONALLY OMITTED]
<PAGE> 40
SCHEDULE 2
LESSORS(1)
FelCor Hotel Asset Company, L.L.C.
FelCor Lodging Company, L.L.C.
FelCor Omaha Hotel Company, L.L.C.
FelCor Canada Co., a Nova Scotia unlimited liability company
FelCor Moline Hotel, L.L.C.
FelCor St. Louis Company, L.L.C.
FelCor Pennsylvania Company, L.L.C.
Center City Hotel Associates, a Pennsylvania limited partnership
(by FelCor Philadelphia Center, L.L.C., as general partner of, and on its
behalf)
FelCor Hotel Company, Ltd., a Texas limited partnership
(by FelCor Hotels GenPar, L.L.C., as general partner of and on behalf
of FelCor HHHC GenPar, P.P., a Delaware limited partnership, as general
partner of, and on its behalf)
FelCor Hotels Investments I, Ltd., a Texas limited partnership
(by FelCor Hotels Financing I, L.L.C., as general partner of, and on its
behalf)
FelCor Hotels Investments II, Ltd., a Texas limited partnership
(by FelCor Hotels Financing I, L.L.C., as general partner of, and on its
behalf)
FelCor Country Villa Hotel, L.L.C.
FelCor Salt Lake, L.L.C.
FelCor Hospitality Company, L.L.C.
- --------------------------------------
(1) Each a Delaware limited liability company, unless otherwise
specified.
<PAGE> 41
SCHEDULE 3
LESSEES(2)
BHTC Canada, Inc., an Ontario corporation
Bristol Hospitality Tenant Company
Bristol Hotel Tenant Company
Bristol Lodging Tenant Company
Bristol Salt Lake Tenant Company
- --------------------------------------
(2) Each a Delaware corporation, unless otherwise specified.
<PAGE> 1
EXHIBIT 10.18
================================================================================
STOCKHOLDERS' AND REGISTRATION
RIGHTS AGREEMENT
BY AND AMONG
FELCOR SUITE HOTELS, INC.
BASS PLC
BASS AMERICA INC.
HOLIDAY CORPORATION
UNITED/HARVEY INVESTORS I, L.P.
UNITED/HARVEY INVESTORS II, L.P.
UNITED/HARVEY INVESTORS III, L.P.
UNITED/HARVEY INVESTORS IV, L.P.
AND
UNITED/HARVEY INVESTORS V, L.P.
DATED JULY 28, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
<TABLE>
<CAPTION>
ARTICLE I
<S> <C> <C>
DEFINITIONS..................................................1
1.1. Definitions.......................................1
ARTICLE II
REGISTRATION RIGHTS..........................................5
2.1. Shelf Registration of Resales.....................5
2.2. "Market Stand-Off" Agreement......................5
2.3. Registration Procedures...........................6
2.4. Registration Expenses............................13
2.5. Indemnification..................................13
2.6. Rule 144.........................................17
2.7. Underwritten Registrations.......................17
2.8. Indemnification of Statutory Underwriters........17
ARTICLE III
CORPORATE GOVERNANCE........................................18
3.1. Composition of the Board.........................18
3.2. Voting................................................18
ARTICLE IV
RESTRICTIONS ON TRANSFER....................................18
4.1. General Restriction..............................18
4.2. Transfers in Compliance with Law.................19
4.3. Legends..........................................19
4.4. Unauthorized Transfers...........................20
4.5. Transfers to Affiliates..........................20
ARTICLE V
RIGHT TO PARTICIPATE IN SALES...............................20
5.1. Right to Participate in Sales....................20
5.2. Securities Not Subject to Tag-Along Right........22
5.3. Termination......................................23
ARTICLE VI
PREEMPTIVE RIGHTS; WAIVER...................................23
6.1. Preemptive Rights................................23
6.2. Regulatory Restrictions; Termination.............23
ARTICLE VII
MISCELLANEOUS...............................................24
7.1. Enforcement......................................24
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C> <C>
7.2. No Inconsistent Agreements.......................24
7.3. Amendments and Waivers...........................24
7.4. Notices..........................................25
7.5. Owner of Registrable Securities..................25
7.6. Successors and Assigns...........................26
7.7. Counterparts.....................................26
7.8. Headings.........................................26
7.9. Governing Law....................................26
7.10. Entire Agreement.................................26
7.11. Attorneys' Fees..................................26
7.12. Severability.....................................26
7.13. Changes in Outstanding Securities................27
7.14. Termination......................................27
7.15. Acquisition of BHR Shares........................27
</TABLE>
ii
<PAGE> 4
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
Page
<S> <C>
Affiliate ..................................................1
Agreement ..................................................1
BAI ..................................................1
Bass Parties ..................................................2
Beneficial ownership..................................................2
BHR ..................................................5
BHR Common Shares .................................................27
Blackout .................................................12
Board ..................................................2
Bristol ..................................................1
Business Day ..................................................2
Co-Sale Acceptance Period............................................20
Co-Sale Notice .................................................20
Co-Selling Stockholder...............................................20
Control ..................................................2
Derivatives .................................................19
Election Notice .................................................23
Exchange Act ..................................................2
Excluded Securities ..................................................2
Excluded Transaction.................................................21
Fair Market Value ..................................................2
FelCor ..................................................1
FelCor Common Stock ..................................................1
Form S-4 ..................................................5
HC ..................................................1
Holdings Parties ..................................................2
indemnified party .................................................15
indemnifying party .................................................15
Initial Ownership ..................................................2
Lock-Up Period .................................................18
Losses .................................................13
Market Stand-Off ..................................................5
Merger Agreement ..................................................1
Non-Offering Stockholders............................................20
Offer Notice .................................................20
Offer Price .................................................20
Offered Securities .................................................20
Offering Stockholder.................................................20
Ownership Percentage..................................................3
Partnership A ..................................................1
Partnership B ..................................................1
Permitted Transferee..................................................3
Person ..................................................3
PLC ..................................................1
Portion .................................................21
Pro Rata Number .................................................21
Prospectus ..................................................3
Public Offering ..................................................3
Qualified Offering .................................................23
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
Qualified Offering Notice............................................23
Registrable Securities................................................3
Registration Statement................................................4
Registration Stockholder..............................................4
Regulatory Objection.................................................23
Rule 144 ..................................................4
Rule 145 ..................................................4
Rule 415 ..................................................4
SEC ..................................................4
Securities .................................................19
Securities Act ..................................................4
Special Counsel ..................................................6
Stockholder ..................................................4
Subsidiary ..................................................4
Suspension Notice .................................................12
Third Party ..................................................4
Third Party Sale .................................................20
Total Voting Power ..................................................4
Transfer .................................................18
Unauthorized Transfer................................................20
Underwritten Registration or Underwritten Offering....................4
Voting Securities ..................................................5
</TABLE>
iv
<PAGE> 6
STOCKHOLDERS' AND REGISTRATION RIGHTS AGREEMENT
This STOCKHOLDERS' AND REGISTRATION RIGHTS AGREEMENT (this
"Agreement"), is made and entered into as of July 27, 1998, by and among FelCor
Suite Hotels, Inc., a Maryland corporation ("FelCor"), Bass America Inc., a
Delaware corporation ("BAI"), Holiday Corporation, a Delaware corporation
("HC"), Bass plc, an English public limited company ("PLC"), United/Harvey
Investors I, L.P., a Delaware limited partnership ("Partnership A"),
United/Harvey Investors II, L.P., a Delaware limited partnership ("Partnership
B"), United/Harvey Investors III, L.P., a Delaware limited partnership
("Partnership C"), United/Harvey Investors IV, L.P., a Delaware limited
partnership ("Partnership D") and United/Harvey Investors V, L.P., a Delaware
limited partnership ("Partnership E").
RECITALS
A. On March 23, 1998, FelCor and Bristol Hotel Company, a Delaware
corporation ("Bristol"), entered into an Agreement and Plan of Merger (the
"Merger Agreement") pursuant to which Bristol will merge with and into FelCor
subject to the terms and conditions thereof.
B. Upon consummation of the Merger, each Stockholder will beneficially
own the number of shares of common stock, par value $0.01 per share, of FelCor
("FelCor Common Stock") set forth on Schedule A hereto.
C. PLC has agreed to be a party to this Agreement solely for the
purposes set forth on the signature pages hereto.
NOW, THEREFORE, in consideration of the foregoing and the covenants
and agreements herein contained, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. For purposes of this Agreement, the following terms
have the respective meanings set forth below when used herein with initial
capital letters. Capitalized terms used herein and not defined herein have the
meanings set forth in the Merger Agreement.
"Affiliate" means, with respect to any Person, any other Person who is
directly or indirectly Controlling, Controlled by or under the common Control
with such Person; provided that no Stockholder of FelCor shall be deemed an
Affiliate of any other
<PAGE> 7
Stockholder of FelCor solely by reason of any investment in FelCor or by this
Agreement.
"Bass Parties" means, collectively, BAI, HC and any of their Permitted
Transferees who are Affiliates of PLC.
"Beneficial ownership", "beneficially own" and "beneficial owner"
shall be determined in accordance with Rules 13d-3 and 13d-5 under the Exchange
Act as in effect on the date hereof.
"Board" means the Board of Directors of FelCor.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New York or Dallas, Texas are authorized or
obligated to close.
"Control" (including the terms "Controlling", "Controlled by" and
"under common Control with") means the possession, directly or indirectly, of
the power to direct or cause the direction of the management policies of a
Person, whether through the ownership of voting securities, as trustee or
executor, by contract or credit arrangement or otherwise.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder, as in effect from time to
time.
"Excluded Securities" means (i) options granted to directors, officers
and employees of FelCor to purchase capital stock of FelCor, and the securities
issued pursuant to such options or plans under which options may be granted,
which have been authorized by the Board, (ii) capital stock issued or sold upon
exercise of warrants, options or rights, or upon conversion of convertible
securities, which warrants, options, rights or convertible securities are
outstanding on the date hereof or were the subject of the preemptive rights
under Article VI or (iii) any securities which are issued to all stockholders
by means of a distribution, stock dividend or stock split or reclassification.
"Fair Market Value" means the price agreed upon by a willing buyer and
a willing seller both in possession of reasonable knowledge of all relevant
facts, with neither party being under any compulsion to act or not act.
"Holdings Parties" means, collectively, Partnership A, Partnership B,
Partnership C, Partnership D and Partnership E and any of their Permitted
Transferees who are Affiliates of The
Hampstead Group, LLC.
"Initial Ownership" means, with respect to each Stockholder, the total
number of shares (equitably adjusted to reflect any
2
<PAGE> 8
stock split, dividend, reclassification or any similar event) of FelCor Common
Stock beneficially owned by such Stockholder as of the Effective Time.
"Ownership Percentage" means with respect to each Stockholder at any
time, the percentage derived by dividing (i) the aggregate number of shares of
FelCor Common Stock beneficially owned by such Stockholder as of such time, by
(ii) the total number of shares of FelCor Common Stock outstanding as of such
time.
"Permitted Transferee" means with respect to each Stockholder, (i) any
Affiliate of such Stockholder, (ii) in the case of Partnership A, Partnership
B, Partnership C, Partnership D or Partnership E, any direct or indirect
constituent partner of such partnership (as to its pro rata interest in the
partnership), and (iii) any transferee approved in writing by FelCor; provided
that, in each case, such transferee has executed a copy of this Agreement and
agreed to be bound by the provisions herein as a Stockholder.
"Person" means an individual, corporation, partnership, association,
trust, limited liability company, joint venture or other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Prospectus" means the prospectus included in any Registration
Statement (including without limitation a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by the
Registration Statement and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
"Public Offering" means an underwritten public offering of Securities
of FelCor pursuant to an effective registration statement under the Securities
Act.
"Registrable Securities" means (i) all shares of FelCor Common Stock
received by a Registration Stockholder pursuant to the Merger, (ii) all shares
of FelCor Common Stock which a Registration Stockholder has an option to
purchase at the Effective Time (including shares of FelCor Common Stock subject
to the Amended and Restated Put/Call Option Agreement, dated as of November 16,
1995, by and between Harvey Hotel Holdings, Inc., H.K. Huie, Jr. and the other
parties thereto, as amended from time to time), and (iii) all other shares of
FelCor Common Stock and shares issued upon exercise of preemptive rights or
upon
3
<PAGE> 9
purchase from another Stockholder, until, in the case of any such security, (a)
such security is disposed of in accordance with a Registration Statement, (b)
such security is saleable by the holder thereof pursuant to Rule 144(k), (c)
such security is saleable by the holder thereof pursuant to Rule 144 without
regard to any volume limitations, or (d) such security is distributed to the
public pursuant to Rule 144.
"Registration Statement" means any registration statement of FelCor
under the Securities Act that covers the Registrable Securities pursuant to the
provisions of Article II of this Agreement, including the related Prospectus,
all amendments and supplements to such registration statement (including
post-effective amendments), all exhibits and all materials incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
"Registration Stockholder" means each of (i) the Bass Parties and (ii)
the Holdings Parties, in each case, including any of their Permitted
Transferees.
"Rule 144", "Rule 145" or "Rule 415", as applicable, means Rule 144,
Rule 145, or Rule 415 under the Securities Act, as each such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and all
rules and regulations promulgated thereunder, as in effect from time to time.
"Stockholder" means each of (i) the Bass Parties, as a group, (ii)
Partnership A, (iii) Partnership B, (iv) Partnership C, (v) Partnership D, and
(vi) Partnership E.
"Subsidiary" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other Persons performing similar
functions are at the time directly or indirectly owned by such Person.
"Third Party" means a prospective purchaser of Securities in an
arm's-length transaction from a Stockholder where such purchaser is not a
Permitted Transferee of such Stockholder.
"Total Voting Power" means the aggregate number of votes which may be
cast by holders of outstanding Voting Securities.
"Underwritten Registration" or "Underwritten Offering" means a
registration under the Securities Act in which securities of
4
<PAGE> 10
FelCor are sold to an underwriter or group of underwriters for reoffering to
the public.
"Voting Securities" means all securities of FelCor entitled, in the
ordinary course, to vote in the election of directors of FelCor.
ARTICLE II
REGISTRATION RIGHTS
2.1. Shelf Registration of Resales. (a) Registration of Resales.
Subject to Section 2.1(b), FelCor will file with the SEC a Registration
Statement under Rule 415 with respect to all Registrable Securities and use its
reasonable best efforts to cause such Registration Statement to become
effective no later than the expiration of the Lock-Up Period. Subject to
Section 2.1(b), FelCor will file with the SEC, if necessary, a Registration
Statement under Rule 415 with respect to all shares of FelCor Common Stock
issued in the Merger and held by officers and directors of Bristol Hotels &
Resorts, Inc., a Delaware corporation ("BHR"), who may be deemed to be
"affiliates" under Rule 145 at the Effective Time and use its reasonable best
efforts to cause such Registration Statement to be effective as of the
Effective Time.
(b) Conversion of Form S-4. Subject to the other provisions of this
Agreement (including the covenant contained in Section 2.3 with respect to the
absence of Suspension Notices), FelCor may, in its sole discretion, convert the
Form S-4 Registration Statement filed by FelCor in connection with its issuance
of shares of FelCor Common Stock pursuant to the Merger (the "Form S-4") to a
Registration Statement on another form permitted to be used by FelCor for the
registration under the Securities Act of the Registration Stockholders'
offering and resale of Registrable Securities (in accordance with the intended
methods of distribution). References herein to the "Form S-4"
will be deemed to include the Registration Statement into which it may be
converted, and the Form S-4 will be deemed to be a "Registration Statement" for
all purposes of this Agreement.
(c) Maintenance of Effectiveness. FelCor will keep the Registration
Statement filed pursuant to this Section 2.1 effective so long as the
Registration Stockholders hold Registrable Securities.
2.2. "Market Stand-Off" Agreement. The Bass Parties and the Holdings
Parties will not, to the extent requested (by timely written notice) by the
managing underwriter or underwriters for any Underwritten Offering of FelCor's
capital stock (or any securities issued by FelCor that are exercisable to
purchase, convertible into or exchangeable for shares of capital stock of
5
<PAGE> 11
FelCor) for FelCor's account in which the expected gross proceeds of such
Offering equal or exceed $100 million, sell, make any short sale of, lend,
grant any option for the purchase of or otherwise Transfer any Registrable
Securities (except to the extent permitted in the Underwritten Offering)
without the prior written consent of FelCor and/or the managing underwriter or
underwriters on the same terms and for the same period of time from the
effective date of the Registration Statement relating to the Underwritten
Offering as the officers and directors of FelCor agree to refrain from taking
such actions; provided, however, such period of time shall not exceed 90
calendar days during any 12 month period. FelCor may impose stop-transfer
instructions with respect to the Registrable Securities of each Stockholder
until the end of such period (not to exceed 90 calendar days during any 12
month period) in order to enforce these restrictions. In no event, however,
will the foregoing parties be required to enter into more than two such
agreements in any 12 month period.
2.3. Registration Procedures. In connection with FelCor's registration
obligations pursuant to this Article II, FelCor will use its reasonable best
efforts to effect such registration to permit the sale of the Registrable
Securities in accordance with the Registration Stockholders' intended method or
methods of distribution of those Registrable Securities, and pursuant thereto
FelCor will as expeditiously as possible:
(a) Prepare and file with the SEC a Registration Statement on
any appropriate form under the Securities Act available for the sale
of the Registrable Securities by the Registration Stockholders in
accordance with the Registration Stockholders' intended method or
methods of distribution thereof, and use its reasonable best efforts
to cause the Registration Statement to become effective and
remain effective as provided herein; provided, however, that not less
than three Business Days before filing a Registration Statement or
Prospectus or any amendments or supplements thereto (excluding
documents that would be incorporated or deemed to be incorporated
therein by reference) FelCor will furnish to the Registration
Stockholders whose Registrable Securities are covered by that
Registration Statement, counsel for such Registration Stockholders
with respect to such registration ("Special Counsel") and the managing
underwriter, if any, copies of all documents proposed to be filed,
which documents will be subject to the review of the Registration
Stockholders, the Special Counsel and the managing underwriters, if
any, and FelCor will not file a Registration Statement or any
amendment thereto or any Prospectus or any supplement thereto
(excluding any documents which, upon filing, would be incorporated or
deemed to be incorporated by reference therein) to which the
Registration Stockholders whose
6
<PAGE> 12
Registrable Securities are covered by that Registration Statement, the
Special Counsel or the managing underwriter, if any, may reasonably
object on a timely basis;
(b) Prepare and file with the SEC any amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement continuously effective
for the period herein specified; cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 (or any similar
provisions then in force) under the Securities Act; and comply with
the provisions of the Securities Act with respect to the distribution
of all securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of
disposition by the sellers thereof set forth in the Registration
Statement as so amended or to the Prospectus as so supplemented;
(c) Notify the Registration Stockholders selling Registrable
Securities, the Special Counsel and the managing underwriters, if any,
promptly, and (if requested by any of those Persons) confirm such
notice in writing, (i) when a Prospectus or any Prospectus supplement
or post-effective amendment has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the
Registration Statement or amendment has become effective, (ii) of any
request by the SEC or any other federal or state governmental
authority for amendments or supplements to a Registration Statement or
related Prospectus or for additional information, (iii) of the
issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that
purpose, (iv) if at any time the representations and warranties of
FelCor contained in any agreement contemplated by Section 2.3(l)
(including any underwriting agreement) cease to be true and correct,
(v) of the receipt by FelCor of any notification with respect to the
suspension of the qualification or exemption from qualification of any
of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, (vi) of
the occurrence of any event which makes any statement made in the
Registration Statement or related Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue
in any material respect or which requires the making of any changes in
a Registration Statement, Prospectus or document so that, in the case
of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading and,
7
<PAGE> 13
in the case of the Prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated or that is necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (vii) of FelCor's reasonable determination that a
post-effective amendment to a Registration Statement would be
appropriate;
(d) Use every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement, or
the lifting of any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, at the earliest possible moment;
(e) If requested by the managing underwriters, if any, or
Registration Stockholders whose Registrable Securities are being
registered, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment such information as the managing
underwriters, if any, and those Registration Stockholders agree should
be included therein to comply with applicable law and (ii) make all
required filings of the Prospectus supplement or such post-effective
amendment as soon as practicable after FelCor has received
notification of the matters to be incorporated in the Prospectus
supplement or post-effective amendment; provided, however, that FelCor
will not be required to take any actions under this Section 2.3(e)
that are not, in the reasonable opinion of counsel for FelCor, in
compliance with applicable law;
(f) Furnish to each Registration Stockholder whose
Registrable Securities are being registered, the Special Counsel and
each managing underwriter, if any, without charge, conformed copies of
the Registration Statement and each post-effective amendment or
supplement thereto, including financial statements (including
schedules, all documents incorporated or deemed incorporated therein
by reference and all exhibits) as such Registration Stockholders may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by each such Registration Stockholder;
(g) Deliver to each Registration Stockholder whose
Registrable Securities are being registered, the Special Counsel and
the underwriters, if any, without charge, copies of the Prospectus or
Prospectuses relating to the Registrable Securities (including each
preliminary prospectus) and any amendment or supplement thereto as
those Persons may reasonably request; and FelCor hereby consents to
the use of that Prospectus or each amendment or supplement thereto by
each of the Registration Stockholders
8
<PAGE> 14
whose Registrable Securities are being registered, and the
underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by that Prospectus or any amendment or
supplement thereto;
(h) Cooperate with the Registration Stockholders that are
selling Registrable Securities and the managing underwriters, if any,
to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold, which certificates
will not bear any restrictive legends; and enable the Registrable
Securities to be in such denominations and registered in such names as
the managing underwriters, if any, may request at least two Business
Days prior to any sale of Registrable Securities to the underwriters;
(i) Use reasonable efforts to cause the sale of Registrable
Securities covered by the Registration Statement to be registered with
or approved by such other governmental agencies or authorities within
the United States, except as may be required solely as a consequence
of the nature of a Registration Stockholder's business, in which case
FelCor will cooperate in all reasonable respects with the filing of
the Registration Statement and the granting of such approvals as may
be necessary to enable such Registration Stockholder or the
underwriters, if any, to consummate the disposition of such
Registrable Securities;
(j) Upon the occurrence of any event contemplated by Section
2.3(c)(vi) or 2.3(c)(vii) hereof, promptly prepare a supplement or
post-effective amendment to the Registration Statement or a supplement
to the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities being sold
thereunder, such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(k) Use its best efforts to cause all Registrable Securities
covered by the Registration Statement to be (i) listed on each
securities exchange, if any, on which similar securities issued by
FelCor are then listed or, if no similar securities issued by FelCor
are then so listed, on the New York Stock Exchange or another national
securities exchange if the securities qualify to be so listed or (ii)
authorized to be quoted on the Nasdaq National Market System or the
Nasdaq SmallCap Market if the securities qualify to be so quoted; in
each case, if requested by the holders of a majority of the
Registrable Securities covered
9
<PAGE> 15
by the Registration Statement or the managing underwriters, if any;
(l) Enter into such agreements (including, in the event of an
Underwritten Offering, an underwriting agreement in form, scope and
substance as is customary in underwritten offerings) and take all such
other actions as may be reasonably requested by the managing
underwriters or the placement agent or other counterparty to the
transaction in order to expedite or facilitate the disposition of the
Registrable Securities, and in such connection, whether or not an
underwriting agreement is entered into and whether or not the
registration is an Underwritten Registration, (i) make such
representations and warranties as may be reasonably requested by the
Registration Stockholders whose Registrable Securities are being
registered and the underwriters, if any, with respect to the business
of FelCor and its Subsidiaries, the Registration Statement, Prospectus
and documents incorporated by reference or deemed incorporated by
reference, if any, in each case, in form, substance and scope as are
customarily made by issuers to underwriters in Underwritten Offerings
and confirm those representations and warranties if and when
requested; (ii) obtain opinions of counsel to FelCor and updates
thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriters,
addressed to each of the underwriters and covering the matters
customarily covered in opinions requested in Underwritten Offerings
and such other matters as may be reasonably requested by the
underwriters); (iii) use its best efforts to obtain "comfort" letters
and updates thereof from the independent certified public accountants
of FelCor (and, if necessary, any other certified public accountants
of any subsidiary of FelCor or of any business acquired by FelCor for
which financial statements and financial data is, or is required to
be, included in the Registration Statement), addressed to each
Registration Stockholder whose Registrable Securities are being
registered and each of the underwriters, if any, such letters to be in
customary form and covering matters of the type customarily covered in
"comfort" letters in connection with Underwritten Offerings; (iv)
deliver such documents and certificates as may be requested by any
Registration Stockholder whose Registrable Securities are being
registered, the Special Counsel and the managing underwriters, if any,
to evidence the continued validity of the representations and
warranties of FelCor and its Subsidiaries made pursuant to clause (i)
above and to evidence compliance with any customary conditions
contained in the underwriting agreement or similar agreement entered
into by FelCor; (v) promptly incorporate in a Prospectus supplement or
post-effective amendment to the Registration
10
<PAGE> 16
Statement such information as the managing underwriter or
underwriters, if any, and such Registration Stockholders agree should
be included therein as may be required by applicable law; and (vi)
make all required filings of such Prospectus supplement or such
post-effective amendment (or other Registration Statement) as soon as
practicable after FelCor has received notification of the matters to
be incorporated in such Prospectus supplement or post-effective
amendment (or other Registration Statement); provided, however, that
FelCor will not be required to take any actions under clauses (v) and
(vi) that are not, in the opinion of counsel for FelCor, in compliance
with applicable law. The foregoing actions will be taken in connection
with each closing under such underwriting or similar agreement as and
to the extent required thereunder;
(m) Make available for inspection by a representative of the
Registration Stockholders whose Registrable Securities are being
registered, any underwriter participating in any disposition of
Registrable Securities and any attorney or accountant retained by such
Registration Stockholders or underwriter, all financial and other
records, pertinent corporate documents and properties of FelCor and
its Subsidiaries, and cause the officers, directors and employees of
FelCor and its Subsidiaries to supply all information reasonably
requested by any such representative, underwriter, attorney or
accountant in connection with the Registration Statement; provided,
however, that any records, information or documents that are
designated by FelCor in writing as confidential at the time of
delivery of such records, information or documents will be kept
confidential by those Persons unless (i) those records, information or
documents are in the public domain or otherwise publicly available,
(ii) disclosure of those records, information or documents is required
by court or administrative order or is necessary to respond to
inquiries of regulatory authorities, or (iii) disclosure of those
records, information or documents, in the opinion of counsel to such
Person, is otherwise required by law (including, without limitation,
pursuant to the requirements of the Securities Act);
(n) Comply with all applicable rules and regulations of the
SEC and make generally available to its security holders earning
statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule
promulgated under the Securities Act) no later than 45 calendar days
after the end of any 12-month period (or 90 calendar days after the
end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Registrable
Securities are sold to underwriters in a firm commitment or
11
<PAGE> 17
best efforts Underwritten Offering, and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the
first fiscal quarter of FelCor, after the effective date of a
Registration Statement, which statements shall cover that 12-month
period;
(o) Cause its directors, officers and other appropriate
employees to participate in any presentations regarding any
Underwritten Offering reasonably requested by the Registration
Stockholders or the managing underwriter or underwriters participating
in the disposition of those Registrable Securities, provided that so
doing does not unreasonably interfere with the business of FelCor and
the out-of-pocket costs thereof are reimbursed to FelCor;
(p) Use all reasonable efforts to facilitate the
Stockholders' purchase or sale of puts, calls and forward contracts,
short sales and other hedging transactions involving Registrable
Securities; and
(q) Use all reasonable efforts to take all of the steps
necessary or advisable to effect the registration of the Registrable
Securities pursuant to the Registration Statement.
FelCor may require each Registration Stockholder whose Registrable
Securities are being registered to furnish to FelCor such information regarding
the distribution of its Registrable Securities as FelCor may, from time to
time, reasonably request in writing and FelCor may exclude from such
registration the Registrable Securities of any Registration Stockholder that
unreasonably fails to furnish such information within a reasonable time after
receiving such request.
Each Registration Stockholder will be deemed to have agreed by virtue
of its acquisition of Registrable Securities that, upon receipt of any notice
from FelCor of the occurrence of any event of the kind described in Section
2.3(c)(ii), 2.3(c)(iii), 2.3(c)(v), 2.3(c)(vi) or 2.3(c)(vii) (each, a
"Suspension Notice"), the Registration Stockholder will forthwith discontinue
disposition of its Registrable Securities covered by the Registration Statement
or Prospectus (a "Blackout") until the Registration Stockholder's receipt of
the copies of the supplemented or amended Prospectus contemplated by Section
2.3(j), or until it is advised in writing by FelCor that the use of the
applicable Prospectus may be resumed, and has received copies of any additional
or supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus. FelCor will not give a Suspension Notice at any
time prior to the date which is 60 calendar days after the effective date of
the Registration Statement (or after expiration of the Lock-Up Period if the
Form S-4 is converted under Section
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2.1(b)) and in no event will the aggregate number of days the Registration
Stockholders are subject to Blackout during any period of 12 consecutive months
exceed 180 days.
2.4. Registration Expenses. All fees and expenses incident to the
performance of or compliance with this Agreement by FelCor will be borne by
FelCor. Those fees and expenses will include, without limitation, (i) all
registration and filing fees (including without limitation fees and expenses
with respect to filings required to be made with the National Association of
Securities Dealers, Inc.), (ii) printing expenses (including without limitation
expenses of printing certificates for Registrable Securities in a form eligible
for deposit with The Depository Trust Company and of printing or photocopying
prospectuses), (iii) messenger, telephone and delivery expenses, (iv)
reasonable fees and disbursements of counsel for FelCor and the Special Counsel
(provided however, that FelCor will reimburse the Registration Stockholders for
the reasonable fees and disbursements of not more than one Special Counsel
chosen by the Registration Stockholders), (v) fees and disbursements of all
independent certified public accountants referred to in Section 2.3(l)(iii)
(including the expenses of any special audit and "comfort" letters required by
or incident to such performance), (vi) Securities Act liability insurance if
FelCor so desires that insurance, and (vii) fees and expenses of all other
Persons retained by FelCor; but excluding underwriting discounts and
commissions and transfer Taxes, if any, relating to the sale or disposition of
Registrable Securities, which shall be borne by the Registration Stockholders.
In addition, FelCor will pay its internal expenses (including without
limitation all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit, the fees and
expenses incurred in connection with the listing of the securities to be
registered on any securities exchange on which similar securities issued by
FelCor are then listed and the fees and expenses of any Person, including
special experts, retained by FelCor.
2.5. Indemnification. (a) Indemnification by FelCor. FelCor will,
without limitation as to time, indemnify and hold harmless, to the fullest
extent permitted by law, each Registration Stockholder holding Registrable
Securities registered pursuant to this Agreement, the officers, directors,
partners, stockholders, agents and employees of each of them, each Person who
Controls (within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) a Registration Stockholder and the officers, directors,
partners, stockholders, agents and employees of any such Controlling Person,
from and against all losses, claims, damages, liabilities, costs (including
without limitation the costs of investigation and attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or based upon any untrue
or alleged
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untrue statement of a material fact contained in any Registration Statement,
Prospectus or form of Prospectus or in any amendment or supplement thereto or
in any preliminary prospectus, or arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
the same are based solely upon information furnished in writing to FelCor by
such Registration Stockholder expressly for use therein; provided, however,
that FelCor will not be liable to any Registration Stockholder to the extent
that any such Losses arise out of or are based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any
preliminary prospectus if either (i)(A) that Registration Stockholder failed to
send or deliver a copy of the Prospectus with or prior to the delivery of
written confirmation of the sale by that Registration Stockholder of a
Registrable Security to the Person asserting the claim from which such Losses
arise and (B) the Prospectus would have completely corrected such untrue
statement or alleged untrue statement or such omission or alleged omission;
(ii) such untrue statement or alleged untrue statement, omission or alleged
omission is completely corrected in an amendment or supplement to the
Prospectus previously furnished by or on behalf of FelCor with copies of the
Prospectus as so amended or supplemented, and that Registration Stockholder
thereafter fails to deliver such Prospectus as so amended or supplemented prior
to or concurrently with the sale of a Registrable Security to the Person
asserting the claim from which such Losses arise; or (iii) such untrue
statement or alleged untrue statement, omission or alleged omission was
contained in any information so furnished in writing by that Stockholder to
FelCor expressly for use in the Registration Statement or Prospectus and was
relied upon by FelCor in the preparation of the Registration Statement,
Prospectus or preliminary prospectus.
(b) Indemnification by Holders of Registrable Securities. In
connection with the Registration Statement, the Registration Stockholders
selling Registrable Securities will furnish to FelCor in writing such
information as FelCor reasonably requests for use in connection with the
Registration Statement or Prospectus and will severally, but not jointly,
indemnify, to the fullest extent permitted by law, FelCor, its directors and
officers, agents and employees, each Person who Controls (within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act) FelCor,
and the directors, officers, agents or employees of such Controlling Persons,
from and against all Losses arising out of or based upon any untrue statement
of a material fact contained in any Registration Statement, Prospectus or
preliminary prospectus or arising out of or based upon any omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent, that such untrue statement or
omission is contained in any information so furnished in writing by that
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Registration Stockholder to FelCor expressly for use in the Registration
Statement or Prospectus and was relied upon by FelCor in the preparation of the
Registration Statement, Prospectus or preliminary prospectus. In no event will
the liability of any Registration Stockholder under this Section 2.5(b) be
greater in amount than the dollar amount of the
proceeds (net of payment of all expenses) received by that Registration
Stockholder upon the sale of the Registrable Securities giving rise to the
indemnification obligation.
(c) Conduct of Indemnification Proceedings. In case any proceeding
(including any governmental investigation) shall be instituted involving any
Person in respect of which indemnity may be sought pursuant to this Section
2.5, such Person (the "indemnified party") will promptly notify the Person
against whom such indemnity may be sought (the "indemnifying party") in writing
and the indemnifying party, upon request of the indemnified party, will retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and will pay the fees and disbursements of such counsel related to
such proceeding; provided that the failure of any indemnified party so to
notify the indemnifying party will not relieve the indemnifying party of its
obligations hereunder except to the extent that the indemnifying party is
actually prejudiced by such failure to notify. In any such proceeding, any
indemnified party will have the right to retain its own counsel, but the fees
and expenses of such counsel will be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying
party and the indemnified party and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood that the indemnifying party will not, in respect
of the legal expenses of any indemnified party in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all indemnified parties and that all such fees and expenses will
be reimbursed as they are incurred. The indemnifying party will not be liable
for any settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any Loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it will be
liable
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for any settlement of any proceeding effected without its written consent if
(i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party will, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is
or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such proceeding.
(d) Contribution. If the indemnification provided for in this Section
2.5 is unavailable to an indemnified party under Section 2.5(a) or 2.5(b) in
respect of any Losses or is insufficient to hold the indemnified party harmless
(other than giving effect to the last sentence of Section 2.5(b)), then each
applicable indemnifying party, in lieu of indemnifying the indemnified party,
will, jointly and severally, contribute to the amount paid or payable by the
indemnified party as a result of the Losses, in the proportion as is
appropriate to reflect the relative fault of the indemnifying party or
indemnifying parties, on the one hand, and the indemnified party, on the other
hand, in connection with the actions, statement or omissions that resulted in
the Losses as well as any other relevant equitable considerations. The relative
fault of the indemnifying party or indemnifying parties, on the one hand, and
the indemnified party, on the other hand, will be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of
a material fact, has been taken or made by, or related to information supplied
by, the indemnifying party or indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action, statement or omission. The amount paid or payable by a party as a
result of any Losses will be deemed to include any legal or other fees or
expenses incurred by such party in connection with any action or proceeding. In
no event will the obligation of a Registration Stockholder under this Section
2.5(d) be greater in amount than the dollar amount of the proceeds (net of
payment of all expenses) received by that Registration Stockholder upon the
sale of the Registrable Securities giving rise to the contribution obligation.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 2.5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this
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Section 2.5(d), an indemnifying party that is a Registration Stockholder will
not be required to contribute any amount in excess of the dollar amount of the
proceeds (net of payment of all expenses) received by that Registration
Stockholder upon the sale of the Registrable Securities giving rise to the
contribution obligation over the amount of any damages which that Registration
Stockholder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
The indemnity, contribution and expense reimbursement obligations of
FelCor hereunder will be in addition to any liability FelCor may otherwise have
under this Agreement. The provisions of this Section 2.5 will survive so long
as Registrable Securities remain outstanding, notwithstanding any transfer of
the Registrable Securities by any holder thereof or any termination of this
Agreement.
2.6. Rule 144. FelCor will file the reports required to be filed by it
under the Securities Act and the Exchange Act, and will cooperate with any
Registration Stockholder (including without limitation by making any
representations as any Registration Stockholder may reasonably request), all to
the extent required from time to time to enable the Registration Stockholder to
sell Registrable Securities without registration under the Securities Act
within the limitations of the exemptions provided by Rule 144. Upon the request
of any Registration Stockholder, FelCor will deliver to such Registration
Stockholder a written statement as to whether it has complied with such filing
requirements. Notwithstanding the foregoing, nothing in this Section 2.6 will
be deemed to require FelCor to register any of its securities under any section
of the Exchange Act.
2.7. Underwritten Registrations. If any of the Registrable Securities
are to be sold in an Underwritten Offering (other than an Underwritten Offering
with respect to Securities that are sold primarily on behalf of FelCor), the
underwriter or underwriters and the managing underwriter or managing
underwriters will be selected by the Registration Stockholders holding a
majority of such Registration Securities; provided, that such underwriter or
managing underwriter shall be reasonably satisfactory to FelCor. Each party
hereby agrees that, in connection with any Underwritten Offering hereunder in
which it participates, it will undertake to offer customary indemnification to
the participatory underwriters.
2.8. Indemnification of Statutory Underwriters. Any institutional
buyer, placement agent or counterparty who is deemed to be an underwriter
pursuant to Section 2(11) of the
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Securities Act in connection with the sale of Registrable Securities by a
Registration Stockholder to such Person will be entitled to the indemnity set
forth in Section 2.5(a).
ARTICLE III
CORPORATE GOVERNANCE
3.1. Composition of the Board. Each of the Bass Parties as a group and
the Holdings Parties as a group have designated on Schedule 1.7 to the Merger
Agreement one Person to serve as a director of FelCor effective upon the
Merger. FelCor will take all necessary action in order to ensure that the
Persons designated pursuant to this Section 3.1 are appointed to the Board
promptly following or upon the effectiveness of the Merger to serve in the
class of directors specified thereon and, in the case of Donald J. McNamara, to
serve as the Chairman of the Board and of its Executive Committee.
3.2. Voting. Until either the Holdings Parties or the Bass Parties
owns less than 25% of its Initial Ownership, each of the Bass Parties and the
Holdings Parties will vote its Voting Securities, or execute written consents,
as the case may be, and each of the Bass Parties and the Holdings Parties will
take all other necessary action (including causing FelCor to call a special
meeting of stockholders), in order to ensure that the Person designated by the
Bass Parties and the Person designated by the Holdings Parties are elected to
the Board, and none of the Bass Parties or the Holdings Parties will vote any
of their Voting Securities in favor of the removal of any director who shall
have been so designated, unless such removal shall be for cause or the Person
entitled to designate such director shall have consented to such removal in
writing. When either the Holdings Parties or the Bass Parties, as applicable,
no longer own at least 25% of their Initial Ownership, each Stockholder's
obligations to take or refrain from taking certain actions pursuant to this
Section 3.2 will terminate without further action. For the avoidance of doubt,
this Article III will not apply to any Voting Securities held or received by
the direct or indirect constituent partners of any of the Holdings Parties.
ARTICLE IV
RESTRICTIONS ON TRANSFER
4.1. General Restriction. Until the six month anniversary of the
Effective Time (such period, the "Lock-Up Period"), no Stockholder may,
directly or indirectly, sell, assign, transfer, grant a participation in,
pledge or otherwise dispose of ("Transfer") any shares of FelCor Common Stock
or any securities convertible into, or exchangeable for shares of FelCor Common
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Stock or rights to purchase shares of FelCor Common Stock ("Derivatives" and
collectively with the shares of FelCor Common Stock referred to herein as
"Securities") except (a) to a Permitted Transferee, (b) in compliance with the
limitations of Rule 145, (c) pursuant to a tender offer or other transaction
that has been approved by the Board and is made to all holders of Securities
that are the subject of the tender offer or other transaction, (d) any pledge
of Securities by a Stockholder made in connection with a bona fide loan to such
Stockholder, (e) any involuntary Transfer resulting from a lender foreclosing
on any pledge of any Securities which pledge existed on the date hereof or was
made in accordance with this Section 4.1, or (f) any Transfer made with the
prior written consent of FelCor.
4.2. Transfers in Compliance with Law. No Stockholder may Transfer any
Securities at any time to any Person except in compliance with applicable
federal, state and foreign securities laws.
4.3. Legends. Each Stockholder understands and agrees that stop
transfer instructions will be given to FelCor's transfer agent with respect to
certificates evidencing the FelCor Common Stock such Stockholder may acquire
pursuant to the Merger and that there will be placed on the certificate
evidencing the FelCor Common Stock such Stockholder may acquire pursuant to the
Merger a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE
MAY NOT BE OFFERED, SOLD, PLEDGED, EXCHANGED, TRANSFERRED OR OTHERWISE
DISPOSED OF EXCEPT IN ACCORDANCE WITH THE REQUIREMENTS OF THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE OTHER CONDITIONS SPECIFIED
IN THAT CERTAIN STOCKHOLDERS' AND REGISTRATION RIGHTS AGREEMENT DATED
JULY 27, 1998 AMONG FELCOR AND THE STOCKHOLDERS NAMED THEREIN, A COPY
OF WHICH WILL BE MAILED TO THE HOLDER HEREOF WITHOUT CHARGE WITHIN
FIVE DAYS AFTER RECEIPT OF WRITTEN REQUEST THEREFOR."
FelCor agrees to notify the transfer agent of the removal of such stop transfer
instructions and legend upon (i) the transfer of the FelCor Common Stock
represented by such certificate pursuant to a Registration Statement under the
Securities Act or in accordance with the applicable provisions of Rule 145
(including without limitation paragraph (d) thereof), (ii) the expiration of
the restrictive period set forth in Rule 145(d), or (iii) the delivery by the
Stockholder to FelCor of a copy of a letter from the staff of the SEC, or an
opinion of counsel in form and substance reasonably satisfactory to FelCor, to
the effect that
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the shares subject thereto may be offered and sold without registration under
the Securities Act.
4.4. Unauthorized Transfers. Any purported Transfer of any Securities
in violation of the provisions of this Article IV (an "Unauthorized Transfer")
will be null and void. FelCor will not register, recognize or give effect to
any Unauthorized Transfer and the purported transferee of any Securities
pursuant to an Unauthorized Transfer will not thereby acquire any rights in
those Securities. FelCor will, immediately upon becoming aware of an actual or
attempted Unauthorized Transfer, instruct the transfer agent or registrar for
the Securities to issue an appropriate stop-transfer order with regard to the
Unauthorized Transfer or attempted Unauthorized Transfer.
4.5. Transfers to Affiliates. No Stockholder will Transfer any of its
shares of FelCor Common Stock to an Affiliate unless such Affiliate executes a
copy of this Agreement and agrees to be bound by all the provisions herein,
whereupon references in this Agreement to a Stockholder will be deemed to
include any such Affiliates; provided, however, this Section 4.5 will not apply
to any distribution by Partnership A or Partnership B to their respective
direct or indirect constituent partners.
ARTICLE V
RIGHT TO PARTICIPATE IN SALES
5.1. Right to Participate in Sales. (a) If a Stockholder (the
"Offering Stockholder") proposes to sell any or all of the Securities owned by
the Offering Stockholder (the "Offered Securities") to a Third Party in a bona
fide transaction not involving an Excluded Transaction (a "Third Party Sale"),
the Offering Stockholder will, prior to effecting any Third Party Sale, deliver
to the other Stockholders (the "Non-OfferingStockholders") a written notice (an
"Offer Notice") specifying (i) the aggregate amount of cash consideration, the
amount of any promissory note or other debt instrument and the Fair Market
Value of any other non-cash consideration (the "Offer Price") for which the
Offering Stockholder proposes to sell the Offered Securities in the proposed
Third Party Sale, (ii) the identity of the purchaser in the proposed Third
Party Sale, (iii) the date the proposed Third Party Sale is scheduled to close,
and (iv) all other material terms of the proposed Third Party Sale, including
without limitation any other contract or transaction entered into or proposed
to be entered into in connection with the Third Party Sale. If a Non-Offering
Stockholder so requests in a written notice (a "Co-Sale Notice") delivered to
the Offering Stockholder within 20 calendar days following the delivery of the
Offer Notice (the "Co-Sale Acceptance Period"), such Non-Offering Stockholder
(a "Co-Selling Stockholder") will be permitted to
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sell in that Third Party Sale, on the same terms as the Offering Stockholder,
up to the number of Securities held by such Co- Selling Stockholder as is
specified in the Co-Sale Notice; provided that the number of Securities to be
sold by such Co- Selling Stockholder participating in such Third Party Sale
will in no event exceed the Portion corresponding to such Co-Selling
Stockholder. As used herein, "Portion" means, with respect to a Co-Selling
Stockholder, the number of Securities beneficially owned by such Co-Selling
Stockholder multiplied by a fraction the numerator of which is the number of
Securities to be sold by the Offering Stockholder and its Permitted Transferees
in such Third Party Sale and the denominator of which is the aggregate number
of Securities beneficially owned by the Offering Stockholder and its Permitted
Transferees, without duplication, immediately prior to such Third Party Sale.
If a Co-Selling Stockholder requests to include more Securities than provided
under the preceding sentences, the Offering Stockholder will attempt to cause
the Third Party purchaser to acquire those additional Securities, but will have
no liability for the Third Party purchaser's refusal to purchase those
additional Securities. To the extent that the Third Party purchaser is
unwilling to purchase all of the Securities proposed to be sold by the Offering
Stockholder and the Co-Selling Stockholders, the number of Securities to be
sold by each of the Offering Stockholder and the Co-Selling Stockholders will
be reduced to their respective Pro Rata Number of Securities. "Pro Rata Number"
means, with respect to the participation of the Offering Stockholder and each
Co-Selling Stockholder in a Third Party Sale, the product of (i) the total
number of Securities proposed to be sold by such Stockholder (not to exceed,
with respect to any Co-Selling Stockholder, such Co- Selling Stockholder's
Portion) and (ii) a fraction, the numerator of which is the total number of
Securities proposed to be purchased by the Third Party purchaser, and the
denominator of which is the total number of Securities proposed to be sold by
both the Offering Stockholder and all of the Co-Selling Stockholders (not to
exceed, with respect to any Co-Selling Stockholder, such Co-Selling
Stockholder's Portion). For purposes of this Section 5.1, an "Excluded
Transaction" will mean any Transfer (i) pursuant to or as a result of (A) a
public offering or (B) a hedging transaction with a broker-dealer, bank or
other financial institution, (ii) in an open-market transaction effected on a
national securities exchange or national quotation system or a transaction
involving as a counterparty an underwriter, broker-dealer or other similar
Person effecting a transaction in or consistent with the ordinary course of its
business, (iii) to one or more financial institutions, investment companies,
pension or other employee benefit plans, trusts, mutual or similar funds or
"qualified institutional buyers" within the meaning of Rule 144A under the
Securities Act, (iv) pursuant to a tender offer or other transaction that has
been approved by the Board, or (v) resulting from any pledge of Securities by a
Stockholder made in connection
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with a bona fide loan to the Stockholder, including any Transfer resulting from
a lender foreclosing on any pledge of any Security or exercising its other
rights in respect thereof.
(b) Notwithstanding anything to the contrary herein contained, the
Offering Stockholder (i) will have the right to elect not to consummate any
Third Party Sale (without liability to the Non-Offering Stockholders) if it is
unable to sell all of the Offered Securities as initially set forth in the
Offer Notice and (ii) may increase the number of Securities included in the
Offered Securities to accommodate any Securities proposed to be sold by a
Non-Offering Stockholder.
(c) If a Co-Selling Stockholder properly elects to participate in a
Third-Party Sale, the Offering Stockholder will represent such Co-Selling
Stockholder in the sale but will not assume any fiduciary duty to the
Co-Selling Stockholder under this Agreement. The Co-Selling Stockholder will
execute and deliver the documentation providing for the Third Party Sale as
negotiated by the Offering Stockholder; provided that, at any time prior to
such execution and delivery, the Co-Selling Stockholder may decline to
participate in the Third Party Sale if the documentation is not reasonably
acceptable to it. If the Co- Selling Stockholder fails to execute and deliver
the documentation or timely to perform its obligations thereunder, the Offering
Stockholder may complete the Third Party Sale without the participation of the
Co-Selling Stockholder. The Offering Stockholder will have no responsibility to
the Co-Selling Stockholder if it fails to consummate a Third Party Sale, and
the Offering Stockholder will in all events be free to abandon any Third Party
Sale at any time prior to its consummation without any liability to the
Non-Offering Stockholders.
If the Holdings Parties so request, the Bass Parties will deliver to
the Holdings Parties such documents as the Holdings Parties may reasonably
request consistent with this Section 5.1 confirming the terms hereof for the
benefit of any Third Party, including without limitation execution of a written
acknowledgment prepared by the Holdings Parties within a reasonable period of
time, not to exceed two Business Days, confirming that, with respect to a
particular Excluded Transaction, the provisions of this Section 5.1 do not
apply to a sale of any Securities owned by any of the Holdings Parties in such
Excluded Transaction.
5.2. Securities Not Subject to Tag-Along Right. For the avoidance of
doubt, this Article V will not apply to (i) the Transfer of Securities by
either of the Holdings Parties to any of their direct or indirect constituent
partners or (ii) Securities held or received by such direct or indirect
partners. Nothing in this Article V or VI will constitute a
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waiver, modification or amendment of any restriction on transfer or ownership
arising under FelCor's charter or Section 4.1 hereof.
5.3. Termination. This Article V will terminate on the date either the
Bass Parties or the Holdings Parties beneficially own less than 25% of their
Initial Ownership.
ARTICLE VI
PREEMPTIVE RIGHTS; WAIVER
6.1. Preemptive Rights. Except for the issuance of Excluded
Securities, FelCor will provide the Bass Parties and the Holdings Parties with
written notice of any sale by it for cash of any Securities of FelCor in which
the gross proceeds of such sale to FelCor and its Subsidiaries equals or
exceeds $100 million (such offering, a "Qualified Offering") no later than the
closing date of the Qualified Offering (such notice, the "Qualified Offering
Notice"). The Qualified Offering Notice will specify the Securities issued, the
purchase price (which, in the case of a public offering, will be the initial
offering price to the public, and in all other cases, the price to the
purchasers of the Securities without regard to underwriting discounts or
commissions), the issuance date and all other material terms of such issuance.
No later than five calendar days after receipt of the Qualified Offering
Notice, each Stockholder must deliver to FelCor a written notice stating
whether such Stockholder desires to acquire the same type of Securities that
were issued and the number of Securities it intends to purchase (the "Election
Notice"). The Election Notice will constitute a binding contract by the
Stockholder to acquire, on the terms set forth in the Qualified Offering
Notice, up to that number of Securities such that, after giving effect to the
consummation of the Qualified Offering and the issuance to the Stockholder
pursuant to this Section 6.1, the Stockholder would hold that Ownership
Percentage equal to such Stockholder's Ownership Percentage immediately prior
to the Qualified Offering, to be completed five days after the Qualified
Offering or on such other date to which FelCor and the relevant Stockholder
agree. Payment will be made in immediately available funds on such completion
date.
6.2. Regulatory Restrictions; Termination. (a) FelCor may modify this
Article VI in whole or in part to the extent necessary to address any
objections raised by the NYSE or any other securities exchange or quotation
system on which the FelCor Common Stock is listed (a "Regulatory Objection").
FelCor will use all reasonable efforts to address any Regulatory Objection so
as to preserve to the greatest extent practicable the parties' rights
hereunder.
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(b) This Article VI will terminate (i) with respect to any Stockholder
that fails three times to deliver an Election Notice with respect to the full
number of Securities purchasable under Section 6.1 and (ii) as to the Bass
Parties or the Holdings Parties, as applicable, on the date the Bass Parties or
the Holdings Parties, respectively, beneficially own less than 50% of their
Initial Ownership.
ARTICLE VII
MISCELLANEOUS
7.1. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties will be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in any Delaware State court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself (without
making such submission exclusive) to the personal jurisdiction of any federal
court located in the State of Delaware or any Delaware State court in the event
any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement and (b) agrees that it will not attempt to deny
or defeat such personal jurisdiction by motion or other request for leave from
any such court. Process in any action, suit or proceeding hereunder may be
served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party
agrees that service of process on such party as provided in Section 7.4 will be
deemed effective service of process or such party. All rights, powers and
remedies provided under this Agreement or otherwise available in respect hereof
at law or in equity will be cumulative and not alternative, and the exercise of
any thereof by any party will not preclude the simultaneous or later exercise
of any other such right, power or remedy by such party.
7.2. No Inconsistent Agreements. FelCor has not, as of the date
hereof, and will not, on or after the date hereof, enter into any agreement
with respect to the Securities which is inconsistent with the rights granted to
the holders of Securities in this Agreement or otherwise conflicts with the
provisions hereof.
7.3. Amendments and Waivers. Except as set forth in Section 6.2(a), no
provision of this Agreement may be waived except by an instrument in writing
executed by the party against whom the
24
<PAGE> 30
waiver is to be effective. The provisions of this Agreement may not be amended,
modified or supplemented without the prior written consent of FelCor and the
Stockholders. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions of this Agreement with respect to a matter that relates
exclusively to the rights of a particular Stockholder and that does not
directly or indirectly affect the rights of the other Stockholders may be given
only by affected Stockholders; provided, however, that the provisions of this
sentence may not be amended, modified, or supplemented except in accordance
with the provisions of the immediately preceding sentence.
7.4. Notices. All notices, requests, claims, demands and other
communications under this Agreement will be in writing and will be delivered
personally, sent by overnight courier (providing proof of delivery) to the
parties or sent by telecopy (providing confirmation of transmission) if to
FelCor, at the address or telecopy number below and if to a Stockholder, at the
address or telecopy number set forth on Schedule A (or at such other address or
telecopy number for a party as will be specified by like notice):
if to FelCor:
FelCor Suite Hotels, Inc.
545 E. John Carpenter Freeway
Suite 1300
Irving, Texas 75062
Attention: President
Attention: General Counsel
Telecopy No.: (972) 444-4949
with a copy to:
Jenkens & Gilchrist, P.C.
1445 Ross Avenue
Suite 3200
Dallas, Texas 75202
Attention: Robert W. Dockery
Telecopy No.: (214) 855-4300
All notices will be deemed to be given only when actually received.
7.5. Owner of Registrable Securities. FelCor will maintain, or will
cause its registrar and transfer agent to maintain, a stock book with respect
to FelCor Common Stock, in which all transfers of Registrable Securities of
which FelCor has received notice will be recorded. FelCor may deem and treat
the person in whose name Registrable Securities are registered in the stock
25
<PAGE> 31
book of FelCor as the owner thereof for all purposes, including without
limitation the giving of notices under this Agreement.
7.6. Successors and Assigns. Except as provided elsewhere herein, no
party may assign its rights or delegate its obligations under this Agreement.
Notwithstanding the foregoing, Permitted Transferees will succeed to the rights
granted under Article II and Article III (to the extent provided therein), and
to the extent applicable thereto, Articles I and VII, of this Agreement.
7.7. Counterparts. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement and
will become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties hereto.
7.8. Headings. Article and Section headings in this
Agreement are included herein for convenience of reference only and will not
constitute a part of this Agreement for any other purpose.
7.9. Governing Law. This Agreement will be governed by, and construed
in accordance with, the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable conflict of laws principles
thereof.
7.10. Entire Agreement. This Agreement constitutes the entire
agreement, and supersedes all prior agreements and undertakings, both written
and oral, including without limitation, the Stockholders' Agreement, dated as
of April 28, 1997, among Holdings, HC, BAI, PLC and Bristol and the
Registration Rights Agreement, dated as of April 28, 1997, among Holdings, HC,
BAI and Bristol, with respect to the subject matter of this Agreement.
7.11. Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the prevailing party, as determined by the court, will
be entitled to recover reasonable attorneys' fees and related disbursements and
expenses in addition to any other available remedy.
7.12. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction will, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as
26
<PAGE> 32
to be unenforceable, the provision will be interpreted to be only so broad as
is enforceable.
7.13. Changes in Outstanding Securities. The provisions of this
Agreement regarding Registrable Securities, FelCor Common Stock and other
securities of FelCor will apply to securities of FelCor or any successor or
assign of FelCor (whether by merger, consolidation, sale of assets or
otherwise) that may be issued in respect of, or by reason of any stock
dividend, stock split, stock issuance, reverse stock split, combination,
recapitalization, reclassification, merger, consolidation or otherwise. Upon
the occurrence of any such event, the definitions of FelCor Common Stock and
Registrable Securities will be appropriately modified by the board of directors
of FelCor.
7.14. Termination. Except as otherwise provided herein, this entire
Agreement will terminate on the earlier of (i) the voluntary or involuntary
dissolution or liquidation of FelCor, and (ii) the mutual agreement of the
parties hereto.
7.15. Acquisition of BHR Shares. The Bass Parties will not, and will
not permit their Affiliates to, purchase or otherwise acquire, or agree or
offer to purchase or otherwise acquire, beneficial ownership of any shares
("BHR Common Shares") of the common stock, par value $0.01 per share, of BHR if
after giving effect thereto the Bass Parties would be deemed to own, by virtue
of the attribution provisions of Section 544 of the Code (as modified by
Section 856 (h)(i)(B) of the Code) (assuming that BHR is a REIT for such
purposes) and/or Section 318 of the Code (as modified by Section 856(d)(5) of
the Code), BHR Common Shares representing more than 9.9% of the total number of
outstanding BHR Common Shares, without the prior written consent of FelCor.
27
<PAGE> 33
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
FELCOR SUITE HOTELS, INC.
By: /s/ LAWRENCE D. ROBINSON
------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President/
General Counsel
BASS AMERICA INC.
By: /s/ A.E. STERN
------------------------
Name: A.E. Stern
Title: Vice President and
Treasurer
HOLIDAY CORPORATION
By: /s/ THOMAS R. OLIVER
------------------------
Name: Thomas R. Oliver
Title: President
UNITED/HARVEY INVESTORS I, L.P.,
By: Hampstead Genpar, L.P., its
General Partner
By: HH GenPar Partners, its
General Partner
By: Hampstead Associates, Inc.,
its Managing General Partner
By: /s/ DANIEL A DECKER
------------------------
Name: Daniel A Decker
Title: Vice President
<PAGE> 34
UNITED/HARVEY INVESTORS II, L.P.,
By: Hampstead Genpar, L.P., its
General Partner
By: HH GenPar Partners, its
General Partner
By: Hampstead Associates, Inc.,
its Managing General Partner
By: /s/ DANIEL A DECKER
------------------------
Name:
Title:
UNITED/HARVEY INVESTORS III, L.P.
By: Hampstead Genpar, L.P., its
General Partner
By: HH GenPar Partners, its
General Partner
By: Hampstead Associates, Inc.,
its Managing General Partner
By: /s/ DANIEL A DECKER
------------------------
Name:
Title:
UNITED/HARVEY INVESTORS IV, L.P.
By: Hampstead Genpar, L.P., its
General Partner
By: HH GenPar Partners, its
General Partner
By: Hampstead Associates, Inc.,
its Managing General Partner
By: /s/ DANIEL A DECKER
------------------------
Name:
Title:
<PAGE> 35
UNITED/HARVEY INVESTORS V, L.P.
By: Hampstead Genpar, L.P., its
General Partner
By: HH GenPar Partners, its
General Partner
By: Hampstead Associates, Inc.,
its Managing General Partner
By: /s/ DANIEL A DECKER
------------------------
Name:
Title:
The undersigned agrees to the terms
of Article IV and Section 7.15.
By: /s/ R.C. NORTH
----------------------------------
Name: R.C. North
Title: Financial Director
<PAGE> 36
<TABLE>
<CAPTION>
SCHEDULE A
Name and Address Number of Shares of
of Stockholder FelCor Common Stock
- ---------------- -------------------
<S> <C>
Bass America Inc. 7,161,698
1105 North Market Street
Suite 1046
Wilmington, Delaware 19801
Attn: Ed White
Holiday Corporation 2,457,046
Three Ravinia Drive
Suite 2900
Atlanta, Georgia 30346
Attn: Craig H. Hunt
Telecopy: (770) 604-5988
United/Harvey Investors I, L.P. 2,170,140
2200 Ross Avenue
Suite 4200 West
Dallas, Texas 75201
Attn: Daniel A. Decker
United/Harvey Investors II, L.P. 2,034,746
2200 Ross Avenue
Suite 4200 West
Dallas, Texas 75201
Attn: Daniel A. Decker
United/Harvey Investors III, 1,356,497
L.P.
2200 Ross Avenue
Suite 4200 West
Dallas, Texas 75201
Attn: Daniel A. Decker
United/Harvey Investors IV, L.P. 1,356,497
2200 Ross Avenue
Suite 4200 West
Dallas, Texas 75201
Attn: Daniel A. Decker
United/Harvey Investors V, L.P. 2,712,995
2200 Ross Avenue
Suite 4200 West
Dallas, Texas 75201
Attn: Daniel A. Decker
</TABLE>
<PAGE> 1
EXHIBIT 99.1
BRISTOL HOTEL COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1998 AND DECEMBER 31, 1997
(Dollars in Thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---------- ------------
ASSETS (Unaudited)
<S> <C> <C>
Current assets
Cash and cash equivalents ................................................... $ 79,649 $ 86,167
Accounts receivable, net .................................................... 36,407 31,305
Inventory ................................................................... 8,393 8,286
Deposits and other current assets ........................................... 10,673 9,298
---------- ----------
Total current assets ............................................. 135,122 135,056
Property and equipment (net of accumulated depreciation
of $88,356 and $76,172, respectively) ........................................ 1,468,407 1,439,167
Other assets
Restricted cash ............................................................. 8,670 9,283
Investments in joint ventures, net .......................................... 12,659 12,396
Goodwill (net of accumulated amortization of $1,226
and $891, respectively) .................................................. 52,394 52,773
Deferred charges and other non-current assets, net .......................... 15,915 17,963
---------- ----------
Total assets ..................................................... $1,693,167 $1,666,638
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt ........................................... $ 8,025 $ 8,455
Accounts payable and accrued expenses ....................................... 45,957 29,852
Accrued property, sales and use taxes ....................................... 13,230 15,911
Accrued insurance reserves .................................................. 10,773 9,530
---------- ----------
Total current liabilities ........................................ 77,985 63,748
Long-term debt, excluding current portion ....................................... 706,865 708,864
Deferred income taxes ........................................................... 243,751 242,530
Other liabilities ............................................................... 2,693 2,702
---------- ----------
Total liabilities ................................................ 1,031,294 1,017,844
---------- ----------
Common stock ($.01 par value; 150,000,000 shares authorized, 45,734,472 shares
issued, and 43,804,901 and 43,641,401 shares outstanding at March 31, 1998
and December 31, 1997, respectively) ......................................... 438 436
Additional paid-in capital ...................................................... 608,529 606,935
Cumulative translation adjustment ............................................... 406 286
Retained earnings ............................................................... 52,500 41,137
---------- ----------
Total stockholders' equity ....................................... 661,873 648,794
---------- ----------
Total liabilities and stockholders' equity ....................... $1,693,167 $1,666,638
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
3
<PAGE> 2
BRISTOL HOTEL COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited, in thousands except per share amounts)
<TABLE>
<CAPTION>
March 31,
------------------------------
1998 1997
------------ ------------
<S> <C> <C>
REVENUE
Rooms .................................................................... $ 120,372 $ 41,731
Food and beverage ........................................................ 28,050 12,475
Management fees .......................................................... 1,516 85
Other .................................................................... 8,864 3,970
------------ ------------
Total revenue ................................................. 158,802 58,261
------------ ------------
OPERATING COSTS AND EXPENSES
Departmental expenses:
Rooms ................................................................ 33,424 9,888
Food and beverage .................................................... 21,239 8,409
Other ................................................................ 2,455 1,207
Undistributed operating expenses:
Administrative and general ........................................... 15,737 5,116
Marketing ............................................................ 11,380 3,838
Property occupancy costs ............................................. 24,474 8,326
Depreciation and amortization ........................................ 12,906 5,164
Corporate expense .................................................... 6,290 3,012
------------ ------------
Operating income ............................................................. 30,897 13,301
Other (income) expense:
Interest expense ......................................................... 12,513 6,278
Equity in income of joint ventures ....................................... (554) --
------------ ------------
Income before income taxes ................................................... 18,938 7,023
Income taxes ................................................................. 7,576 2,613
------------ ------------
Net income ................................................................... $ 11,362 $ 4,410
============ ============
Earnings per common and common equivalent share:
Net income:
Basic ................................................................ $ 0.26 $ 0.18
Diluted .............................................................. $ 0.26 $ 0.17
Weighted average number of common and common equivalent shares outstanding:
Basic ................................................................ 43,718,751 24,848,760
Diluted .............................................................. 44,535,273 25,796,808
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
4
<PAGE> 3
BRISTOL HOTEL COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited, in thousands)
<TABLE>
<CAPTION>
March 31,
----------------------
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ...................................................................................... $ 11,362 $ 4,410
Adjustment to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization ............................................................... 12,906 5,164
Amortization of deferred financing costs .................................................... 1,257 528
Equity in earnings of joint ventures ........................................................ (554) --
Non-cash portion of foreign currency translation ............................................ 120 --
Compensation expense recognized for employee stock options .................................. 73 64
Changes in working capital ...................................................................... 7,413 (3,628)
Increase in advance deposits .................................................................... 714 286
(Increase) decrease in restricted cash .......................................................... 613 (190)
Deferred income taxes provision ................................................................. 1,221 624
Distribution from joint ventures ................................................................ 175 --
Decrease in other liabilities ................................................................... (9) (1,062)
-------- --------
Cash provided by operating activities ................................................ 35,291 6,196
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Improvements to property and equipment .......................................................... (40,820) (6,156)
Purchase of property and equipment .............................................................. -- (35,000)
-------- --------
Cash used in investing activities .................................................... (40,820) (41,156)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt .................................................................... (2,429) (1,665)
Proceeds from senior term facility .............................................................. -- 41,200
Proceeds from exercise of employee stock options ................................................ 1,523 --
Increase in deferred charges and other non-current assets ....................................... (83) (3,262)
-------- --------
Cash provided by (used in) financing activities ...................................... (989) 36,273
-------- --------
Net increase (decrease) in cash and cash equivalents ................................................ (6,518) 1,313
Cash and cash equivalents at beginning of period .................................................... 86,167 4,666
-------- --------
Cash and cash equivalents at end of period .......................................................... $ 79,649 $ 5,979
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
5
<PAGE> 4
BRISTOL HOTEL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
Bristol Hotel Company (the "Company" or "Bristol") is a Delaware
corporation which was incorporated in November 1994 and began
operations after the acquisitions of Harvey Hotel Company, Ltd. and its
subsidiaries and United Inns, Inc. At March 31, 1998, the Company owned
86 hotels and managed 15 additional hotels, two of which are owned by
joint ventures in which the Company owns a 50% interest. The
properties, which contain approximately 28,800 rooms, are located in 22
states, the District of Columbia and Canada. The Company acquired the
ownership and/or management of 60 of these properties on April 28, 1997
(the "Holiday Inn Acquisition").
The condensed consolidated balance sheet at December 31, 1997 has been
derived from the audited balance sheet at that date. The condensed
consolidated balance sheet at March 31, 1998, the condensed
consolidated statements of income for the three months ended March 31,
1998 and 1997, and the condensed consolidated statements of cash flow
for the three months ended March 31, 1998 and 1997 have been prepared
by the Company and are unaudited. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary
to present fairly, in all material respects, the financial position of
the Company as of March 31, 1998, and the results of operations and
cash flows for the three months ended March 31, 1998 and 1997 have been
made. Interim results are not necessarily indicative of fiscal year
performance because of seasonal and short-term variations.
2. SUBSEQUENT EVENTS
On April 21, 1998, the Company acquired the 187-room Sheraton Four
Points Hotel in Leominster, Massachusetts for $9.0 million. The
purchase price was funded with borrowings from the FelCor Facility (as
described below).
On April 30, 1998 the Company acquired 20 midwestern hotels (the "Omaha
Acquisition"). The total consideration for these assets was $40 million
of assumed debt (of which $24.9 million was paid off at closing), $20
million in cash and 1.43 million shares of the Company's common stock.
The portfolio consists of nine full-service Holiday Inns, five Holiday
Inn Express hotels, five Hampton Inns and one Homewood Suites, with
locations in Omaha, Nebraska; Moline, Illinois; Davenport, Iowa;
central Kansas and Midland/Odessa, Texas. The Company funded the cash
portion of the purchase price and the $24.9 million of debt prepayments
with borrowings under the FelCor Facility (as described below).
On April 21, 1998, the Company entered into an interim credit facility
with FelCor Suite Hotels, Inc. ("FelCor") pursuant to which the Company
can borrow up to $120 million to fund acquisitions and redevelopment
costs and for other corporate purposes (the "FelCor Facility"). The
FelCor Facility bears interest at a rate of LIBOR plus 2% and will
mature on December 31, 2003.
On May 11, 1998, the Company refinanced its existing $455 million loan
from Nomura Asset Capital Corporation and Bankers Trust Company with a
new $455 million loan from Bankers Trust Company (the "BT Loan"). The
BT Loan is secured by a pledge of stock in the subsidiaries of the
Company, bears interest at LIBOR plus 1-3/4% and will mature on May 11,
2001. The Company incurred approximately $34 million in yield
maintenance costs and prepayment penalties related to the payoff of the
existing facility, which, along with approximately $6.8 million of
deferred financing charges, will be recognized as an extraordinary loss
in the second quarter of 1998.
6
<PAGE> 5
BRISTOL HOTEL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. PROPOSED MERGER WITH FELCOR SUITE HOTELS, INC.
On March 24, 1998, the Company announced a proposed merger with FelCor,
subject to approval by shareholders of both companies. Under the terms
of the proposed merger (the "FelCor Merger"), Felcor will acquire the
real estate holdings and assume the associated debt of the Company in
return for 31.7 million shares of newly issued FelCor stock. Prior to
the FelCor Merger, the Company will spin-off, as a taxable dividend,
its hotel operating business as a separate publicly traded hotel
operating company to be known as Bristol Hotels & Resorts ("New
Bristol"). The spin-off will be followed by the merger of Bristol into
Felcor, with Felcor acquiring all of Bristol's remaining assets,
including its 110 owned hotels (giving effect to acquisitions closed
subsequent to quarter end).
Each of the Company's hotels acquired by FelCor in the merger will be
leased to and operated by New Bristol. The merged company, which will
be renamed FelCor Lodging Trust, Ltd., will be the largest non-paired
share lodging REIT and New Bristol will be the largest independent
hotel operating company in the U.S. The two companies will be
separately owned and managed, but are expected to work together in the
acquisition and leasing of additional hotels.
In the spin-off, Bristol stockholders will receive one common share of
New Bristol for every two of their existing Bristol common shares. In
the merger, Bristol stockholders will receive 0.685 FelCor common
shares for each of their existing Bristol common shares. FelCor
stockholders will continue to hold their current FelCor common shares.
As a result of these transactions, existing Bristol stockholders will
own all of New Bristol's equity and 44% of FelCor's outstanding common
equity. The spin-off will be taxable to Bristol and its stockholders,
while the merger will be tax-free.
The following unaudited pro forma statements of income of New Bristol
give effect to Bristol's contribution of its hotel operating business
to New Bristol, the Holiday Inn Acquisition, the spin-off, the merger
and the Omaha Acquisition as if each event had occurred on January 1 of
the periods presented. The pro forma statements of income are presented
for illustrative purposes only and do not purport to be indicative of
the results that would have actually been obtained had such
transactions been completed for the periods presented or that may be
obtained in the future.
7
<PAGE> 6
BRISTOL HOTEL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. PROPOSED MERGER WITH FELCOR SUITE HOTELS, INC. (CONTINUED)
<TABLE>
<CAPTION>
Pro Forma for the Three
Months Ended March 31,
1998 1997
---------- ----------
(unaudited, in thousands
except per share amounts)
-------------------------
<S> <C> <C>
Total revenue ....................................... $ 170,410 $ 160,448
Departmental expenses ............................... 62,206 60,240
Undistributed operating expenses (including tenant
lease expense) ................................... 105,457 97,562
---------- ----------
Operating income .................................... 2,747 2,646
Interest expense .................................... 205 205
---------- ----------
Income before income taxes .......................... 2,542 2,441
Income taxes ........................................ 1,017 974
---------- ----------
Net income .......................................... $ 1,525 $ 1,467
========== ==========
Earnings per common and common
equivalent share ................................. $ 0.09 $ 0.10
========== ==========
Weighted average number of common and
common equivalent shares outstanding ............. 17,565,343 15,101,288
========== ==========
</TABLE>
4. PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
The following unaudited pro forma statement of income gives effect to
the Holiday Inn Acquisition and related debt refinancings as if each
event had occurred on January 1, 1997. The pro forma statement of
income is presented for illustrative purposes only and does not purport
to be indicative of the results that would have actually been obtained
had such transactions been completed as of the assumed dates and for
the period presented or that may be obtained in the future. This pro
forma statement of income is used for comparison to the actual
operating results for the three months ended March 31, 1998 in
"Management's Discussion and Analysis of Results of Operations and
Financial Condition."
8
<PAGE> 7
BRISTOL HOTEL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
4. PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (CONTINUED)
<TABLE>
<CAPTION>
Pro Forma for the
Three Months Ended
March 31, 1997
-----------------
(unaudited, in thousands
except per share amounts)
<S> <C>
Total revenue ............................................ $ 148,684
Departmental expenses .................................... 55,152
Undistributed operating expenses ......................... 66,074
-----------
Operating income ......................................... 27,458
Other (income) expenses:
Interest expense ....................................... 14,809
Equity in income of joint ventures ..................... (339)
-----------
Income before income taxes ............................... 12,988
Income taxes ............................................. 5,012
-----------
Net income ............................................... $ 7,976
===========
Earnings per common and common
equivalent share ...................................... $ 0.20
===========
Weighted average number of common and
common equivalent shares outstanding .................. 39,838,770
===========
</TABLE>
NOTE TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
A. Bristol acquired the Allerton Hotel in Chicago (the
"Allerton") on January 31, 1997. There were no adjustments
made to the pro forma condensed consolidated statement of
income for this property. Results of operations for this
property are included from the acquisition date.
9
<PAGE> 1
EXHIBIT 99.2
[FELCOR SUITE HOTELS INC. LETTERHEAD]
FOR IMMEDIATE RELEASE:
Contacts: Thomas J. Corcoran, Jr.
President & CEO
Randy Churchey
Senior Vice President & CFO
Monica L. Hildebrand
Vice President/Director of Communications
(972) 444-4900
FELCOR SHAREHOLDERS APPROVE
MERGER WITH BRISTOL
IRVING, TEXAS... JULY 27, 1998 - FelCor Suite Hotels, Inc., (NYSE:FCH),
the largest non-paired share hotel real estate investment trust (REIT),
announced that its shareholders had approved the previously announced merger
with Bristol Hotel Company (NYSE:BH) at FelCor's 1998 Annual Shareholders'
Meeting held today. The merger will result in FelCor's acquisition of 109
Bristol hotels. Approximately 75% of FelCor's outstanding common stock voted in
favor of, and less than 1% voted against, the proposed merger. At the meeting,
shareholders also elected two directors and adopted amendments to FelCor's
charter to change the name of the company to FelCor Lodging Trust Incorporated
and to increase its number of authorized shares of capital stock.
Bristol's shareholders also approved the proposed merger at a
shareholders' meeting held today.
The merger is expected to become effective at 9:00 a.m. EDT on Tuesday,
July 28, 1998. FelCor will continue to trade on the New York Stock Exchange
under the symbol FCH. Prior to the effectiveness of the merger, Bristol will
spin-off, as a taxable dividend, all of its hotel management business into a
newly formed public company known as Bristol Hotels & Resorts.
At the 1998 Annual Meeting of Shareholders, Hervey A. Feldman assumed a
new role as FelCor's Chairman Emeritus and did not stand for re-election. Mr.
Feldman will continue to be involved in FelCor's growth and strategic plans for
the future. Michael D. Rose, the former Chairman of Promus Hotel Corporation,
and Charles N. Mathewson, the Chairman and CEO of International Game Technology,
were elected to FelCor's board of directors at the annual meeting. In addition,
following the closing of the merger with Bristol, Richard C. North, Financial
Director of Bass plc, Robert H. Lutz, Jr., Chairman and CEO of Amresco, Inc.,
and Donald J. McNamara, Chairman of The Hampstead Group will join FelCor's
board, bringing to ten the number of directors on FelCor's board.
- more -
<PAGE> 2
FelCor Shareholders Approve Bristol Merger
July 27, 1998
Page 2
Following effectiveness of the merger on July 28, 1998, FelCor Lodging
Trust will own 195 hotels with 49,882 rooms and suites. FelCor is the largest
owner of Embassy Suites(R) hotels. As a result of the merger, FelCor expects to
become the largest owner of Crowne Plaza(R) and Holiday Inn(R)-branded hotels
upon completion of planned conversions. The vast majority of the 195 hotels are
operated under the Embassy Suites, Doubletree Guest Suites(R), Doubletree(R),
Sheraton Suites(R), Sheraton(R), Crowne Plaza, Holiday Inn or Hilton Suites(R)
brands. FelCor's total market capitalization will be approximately $4.0 billion.
With the exception of historical information, the matters discussed in this news
release include "forward looking statements" within the meaning of the federal
securities law and are qualified by cautionary statements contained herein and
in FelCor's filings with the Securities and Exchange Commission.
###
<PAGE> 1
EXHIBIT 99.3
[FELCOR LODGING TRUST LETTERHEAD]
FOR IMMEDIATE RELEASE:
Contacts: Thomas J. Corcoran, Jr.
President & CEO
Randy Churchey
Senior Vice President & CFO
Monica L. Hildebrand
Vice President/Director of Communications
(972) 444-4900
FELCOR AND BRISTOL COMPLETE MERGER TRANSACTION
TRANSACTION CREATES $4.0 BILLION HOTEL REIT
DALLAS, JULY 28, 1998 - FelCor Lodging Trust Incorporated (NYSE: FCH),
formerly FelCor Suite Hotels, Inc., today announced completion of the merger
of Bristol Hotel Company's real estate holdings with and into FelCor. The
merger, which was initially announced on March 24, 1998, establishes FelCor
Lodging Trust as the nation's largest non-paired share hotel real estate
investment trust (REIT) and one of the country's premier lodging companies.
FelCor will continue to trade under the ticker symbol FCH on the New York
Stock Exchange.
On July 27, 1998, the merger was approved by the shareholders of both
FelCor and Bristol. The merger results in FelCor's acquisition of 109
Bristol hotels in return for 31.1 million shares of newly issued FelCor
common stock. Based on the July 27, 1998 closing stock prices, the
transaction is valued at approximately $1.7 billion, including the
assumption of approximately $700 million in debt. With the completion of
this transaction, FelCor's market capitalization will be approximately $4
billion and the REIT will own approximately 195 hotels with nearly 50,000
rooms and suites.
The Bristol hotels add more than 28,000 rooms to the FelCor portfolio.
The average Bristol hotel has 266 keys and more than 8,000 square feet of
meeting space. Based on the current FelCor stock price, the Bristol hotels
price per key is approximately $59,000. Eighty-seven of the newly acquired
Bristol hotels are either all-suite upscale, upscale full service or
traditional full-service hotels. FelCor is the largest owner of Embassy
Suites(R) hotels. As a result of the merger, FelCor is the owner of the
largest number of Crowne Plaza(R) and Holiday Inn(R) hotels.
-more-
<PAGE> 2
FelCor and Bristol Complete Merger
July 28, 1998
Page 2
The merger establishes significant brand owner/manager relationships
for FelCor with Bass plc and its subsidiary Bass Hotels & Resorts, which
acquired approximately 13% of FelCor's common stock in the merger. FelCor
also establishes a strategic relationship with Bristol Hotels & Resorts
(NYSE:BH), the new hotel operating company spun off from Bristol prior to
its merger into FelCor, which leases and operates the hotels acquired by
FelCor in the merger. Following the merger with Bristol, FelCor will
continue Bristol's repositioning and redevelopment program, under which the
redevelopment of 39 hotels was recently completed, and pursuant to which 43
hotels are currently in the process of redevelopment or are expected to be
completed in 1999. FelCor also expands its potential acquisition pool
through its new alliance with Bass Hotels & Resorts, which operates or
franchises more than 2,600 hotels and 450,000 guestrooms in more than 90
countries and territories. As a result of the merger, FelCor also
diversifies its portfolio both geographically and by asset class, adding
hotels in many key markets and broadening its portfolio in the upscale and
traditional full-service hotel segments. FelCor's hotel portfolio is
concentrated in the upscale and traditional full-service segments with over
93% of revenues derived from the hotels in those segments.
Bristol Hotels & Resorts, as the successor to Bristol's hotel
operating business and as the lessee of the Bristol hotels acquired by
FelCor, will remain a leading franchisee in Bass Hotels & Resorts' $1.5
billion modernization program. By the year 2000, FelCor expects to complete
the investment, commenced by Bristol in 1997, of approximately $400 million
(of which approximately $200 million remains to be spent) in the
redevelopment of Crowne Plaza and Holiday Inn hotels owned by FelCor and
leased to Bristol Hotels & Resorts.
Concurrently with the completion of the merger, Richard North,
Financial Director of Bass p1c; Robert Lutz, Chairman and CEO of Amresco,
Inc.; and Donald J. McNamara, Chairman of The Hampstead Group, each of whom
had been a director of Bristol, became FelCor directors, bringing the
number of directors on it's board to 10.
"This merger transaction creates new strategic alliances for FelCor
with Bristol Hotels & Resorts and with Bass Hotels & Resorts and is a
natural extension of our original business plan of aligning ourselves with
top brands and strong management/operating teams while primarily acquiring
hotels at below their replacement cost and repositioning and/or rebranding
them for strong internal growth," said Thomas J. Corcoran, Jr., President
and CEO of FelCor.
FelCor Lodging Trust Incorporated is the largest non-paired share
hotel REIT. The company is the largest owner of Promus-branded hotels
(NYSE:PRH). Since its initial public offering in 1994, the company's
portfolio has grown to 195 hotels with nearly 50,000 rooms and suites. The
company maintains strategic relationships with key hotel brand
owners/management companies. These include Promus Hotel Corporation,
Bristol Hotels and Resorts, Bass Hotels & Resorts and Starwood Hotels &
Resorts. The company's hotels are operated under a number of the nation's
leading hotel brands, including the Embassy Suites, Doubletree Guest
Suites(R), Doubletree(R), Sheraton Suites(R), Sheraton(R), Crowne Plaza,
Holiday Inn and Hilton Suites(R) brands.
With the exception of historical information, the matters discussed in this
news release include "forward looking statements" within the meaning of the
federal securities law and are qualified by cautionary statements contained
herein and in FelCor's filings with the Securities and Exchange Commission.
###
<PAGE> 3
FelCor and Bristol Complete Merger
July 28, 1998.
Page 3
SUMMARY FACT SHEET
(Statistics are pro forma for all hotels owned at December 31, 1997)
<TABLE>
<CAPTION>
Bristol FelCor Combined
------------ ------------ --------------
<S> <C> <C> <C>
Owned Hotels 109 86 195
Rooms 28,718 21,164 49,882
Current Equity
Market Capitalization $1.0 Billion $1.5 Billion $ 2.5 Billion
Debt $0.7 Billion $0.8 Billion $ 1.5 Billion
Current Total Market
Capitalization $1.7 Billion $2.3 Billion $ 4.0 Billion
1997 Occupancy 72.2% 73.2% 72.7%
1997 ADR $ 74.47 $ 112.44 $ 89.34
1997 RevPAR $ 53.77 $ 82.33 $ 64.95
1997 RevPAR Growth 7.5% 8.8% 8.3%
1997 Hotel Acquisitions $773 Million $700 Million $1.473 Billion
Shares (Diluted) 46.3 44.6 76.3(1)
</TABLE>
(1) Reflects an exchange ratio of 0.685 FelCor shares for each Bristol
share.
<PAGE> 4
FelCor and Bristol Complete Merger
July 28, 1998
Page 4
PORTFOLIO INFORMATION
<TABLE>
<CAPTION>
FelCor Bristol Combined
Brand Hotels Rooms Hotel Rooms Hotels Rooms
----- ------ ------ ------ ----- ------ ------
<S> <C> <C> <C> <C> <C> <C>
All-Suite Upscale
Embassy Suites 58 14,332 0 0 58 14,332
Doubletree Guest Suites 14 2,713 0 0 14 2,713
Sheraton Suites 4 984 0 0 4 984
Hilton Suites 1 174 0 0 1 174
Crowne Plaza Suites 0 0 1 295 1 295
Homewood Suites 0 0 1 108 1 108
Bristol House 0 0 1 127 1 127
Sub-total 77 18,203 3 530 80 18,733
Upscale Full Service
Crowne Plaza 0 0 19 6,814 19 6,814
Doubletree Hotel 3 704 0 0 3 704
Harvey Hotel 0 0 4 1,262 4 1,262
Sheraton 5 1,956 0 0 5 1,956
Hilton 1 301 0 0 1 301
Sub-total 9 2,961 23 8,076 32 11,037
Traditional Full Service
Holiday Inn 0 0 47 12,939 47 12,939
Holiday Inn Select 0 0 6 2,145 6 2,145
Ramada 0 0 1 220 1 220
Days Inn 0 0 1 157 1 157
Courtyard by Marriott 0 0 2 420 2 420
Holiday Inn & Suites 0 0 2 509 2 509
Sheraton Four Points 0 0 1 187 1 187
Independent 0 0 1 181 1 181
Sub-total 0 0 61 16,758 61 16,758
Limited Service
Holiday Inn Express 0 0 8 1,113 8 1,113
Fairfield Inn 0 0 5 931 5 931
Hampton Inn 0 0 9 1,310 9 1,310
Sub-total 0 0 22 3,354 22 3,354
TOTAL 86 21,164 109 28,718 195 49,882
</TABLE>
